Question

1. Why is facility location such a strategic decision? Describe the potential trade-offs involved with facility location decisions. [2 points] 2. What is a locavore strategy? [1 point] 3. List and describe at least four factors that influence facility location decisions. [2 point] 4. What is an example of a "weight losing product"? Why is it a weight losing product? [1 point] 5. What is a "brownfield"? [1 point] 6. What is a free trade zone? [1 point] 7. What is an inventory tax and why would a state or municipality agree to waive an inventory tax? [1 point] 8. What is an industry cluster? [1 point]

Answer 1

1. Deciding a facility location is a tactical and challenging thing as it is influenced by several factors. Trade offs in selection would be deciding between Higher wages or Lower transportation costs (or vice versa), distance from vendors and distance from buyers, etc.,

2. Locavore strategy is a tactic followed by a Locavore who eats food from their locality or area which spans around a radius of about 500 kilometers. It is a strategy followed by people to connect directly to their food source for their diet.

3. Factors that affect Selection of Location areas follows:

• Accessibility to materials
• Labour/workers availability
• Accessibility to financial and communication facilities
• Infrastructure and transport facilities
• Market for the product

4. Weight losing products refer to those products put into production of which the Inputting raw material is heavier and the resulting output of finished goods is much lighter than the input. Best example would be Furniture industry where the input is lot heavier than the resulting output.

5. Brownfield refers to those already developed land areas on which a developmental project is proposed to be put into effect again.

6. Free trade zones refers to those areas which enjoy special privilege of no chargeability of customs or taxes over the goods manufactured, assembled, imported or reexported to/from these areas.

7. Inventory taxes refers to the tax charged over the levels of inventory maintained by the seller. It should be waived by the authority as it is extra burden on seller as he is asked to pay taxes on goods of which the monies are not yet been realised. It causes cascading affect of taxes too.

8. Canopy of business units that are connected by a common market or technology or vendors or by any other means within an industry are commonly referred as Industry Cluster.