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East Coast Manufacturing, Inc. plans to locate a new production facility in Hartford, Philadelphia, or Baltimore. Six location factors are important: cost per product unit, labor availability, union activities, local transportation, proximity to similar industry and proximity to raw materials. The weighting of these factors, the scale for each factor and the scores for each location are shown below. Different SME's (subject matter experts) scored each of the non-economic factors. So, unfortunately, the scores for the non-economic factors are scaled differently. The scales are indicated on the table. On the scale, the highest score is always the best value. For example, for the scale 1-5, the best value is 5. For each of the Non-economic factors, it is possible to score the maximum.
Location Factor
Factor Weight
Scale
Hartford
Philadelphia
Baltimore
Cost per product unit
0.55
$48
$59
$52
Labour availability
0.15
0-5
2.5
4.0
Union activities
0.10
0-3
2.7
1.8
0.9
Local transportation
1.2
2.4
Proximity to similar industry
0.05
0-1
0.5
1.0
0.7
Proximity to raw materials
0.6
0.4
For the following, calculate all results three decimal place (example, 0.xxx or x.xxx).
a) Using the factor scoring (or equivalent the factor rating) approach we studied in class and modified as appropriate, which site do you recommend? Why?
b) With everything else remaining the same as in the problem statement, what must the cost per product unit for Philadelphia be so that its total factor score is equal to the total factor score for Hartford?
determine whether outsourcing of the particular manufacturing operation makes financial sense
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