Reference no: EM132380359

Question

King's Supermarkets was a chain of twenty-five highly successful supermarkets located in medium size cities in New England, New York, and New Jersey. It had always been the company policy to have only one leading store in each of a number of cities of approximately 25,000 to 50,000 population.

In each city, the best possible location was sought out and very large stores were developed with attractive buildings, large parking lots, and complete product lines of food and food-related products sold at advertised competitive prices. Although the company had to close a few poorly located markets over the years, it relied almost entirely for its choice of cities and locations on the instincts of the founder-president, Walter King. The company's record of profits indicated that his judgment had been generally correct over the 25 years since he had opened his first market.

After Walter King's daughter Donna graduated from the university with a degree in business administration and joined the company as assistant to the president, the researching of new city locations was made one of her major assignments. Ms. King felt that the techniques of operations research might be applied to this problem. She pointed out that there must be a "best" city and a "best" location for expansion at any given time and for the future, if only this could be discovered.

She insisted that all a company needed to do was to clarify its goals; identify the constraints such as the cash available, existing competition, and distance from company warehouses; look at such variables as cost of real estate, money costs, market size and characteristics, local labor markets, and local taxes and regulations; and then put these into a model to come up with a means of identifying the best location.

Her father and the other officers of the company maintained that operations research might be all right for an oil company, a large aerospace company, or even a large bank, but it was too complicated approach and there were too many intangibles in a matter of a supermarket location.

Moreover, for 25 years the company had been successful in relying on the president's judgment, and anyway, neither Mr. King nor any of the other top officers or managers understood advanced mathematics. In addition, they felt that they wanted no part of a company where such major decisions were made by a computer. They pointed out emphatically that they were merchandisers and not computer experts.

Ms. King was not convinced. She was sure that operations research would be a great help in such decisions. But she did not know what to do under the circumstances.

If you are in Ms. King shoes, what will you do to convinced your father and other officers that your assumptions are correct?