A. linear programming. B. consumer surveys. C. factor rating. D. transportation models. E. center of gravity methods. Answer: -factor rating When a location evaluation includes both quantitative and qualitative inputs, a technique that can be used is:
When a location evaluation includes both quantitative and qualitative inputs, a technique that can be used is:
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50.A full-service restaurant is considering opening a new facility in a specific city. The table belowshows its ratings of four factors at each of two potential sites.FactorWeightGary MallBelt LineAffluence of local population.203030Traffic flow.405020Parking availability.203040Growth potential.201030The score for Gary Mall is _____ and the score for Belt Line is ______.
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- Which of the following is an approach to location analysis that includes both qualitative and quantitative consideration?
- Which of the following is a method which is used in location analysis?
- Which of the following is a location analysis techniques typically employed by a service organization?
- Which are the primary site related factors in location decisions?
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51.A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 peryear, and variable costs 0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year,with variable costs of $0.35 per unit. If demand is expected to be 10 million units, which plantoffers the lowest total cost?
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52.The center-of-gravity method doesnottake into consideration thea.location of marketsb.volume of goods shipped to the marketsc.value of the goods shippedd.combination of volume and distancee.center-of-gravity method considers none of the abovec (Methods of evaluating location alternatives, moderate)
53.The center-of-gravity method is used primarily to determine what type of locations?
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Which of the following is an approach to location analysis that includes both qualitative and quantitative consideration?
An approach to location analysis that can include both qualitative and quantitative considerations is: A. the center-of-gravity method.
Which of the following is a method which is used in location analysis?
Center-of-gravity technique This method is generally used to locate the warehouses or distribution centre so that the maximum number of markets can be covered easily.
Which of the following is a location analysis techniques typically employed by a service organization?
Location analysis techniques typically employed by service organizations include: the factor rating method.
Which are the primary site related factors in location decisions?
Several factors that influence location positioning include the location of raw materials, proximity to the market, climate, and culture.
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Terms in this set (93)
(T/F) FedEx chose Memphis, Tennessee, for its central location, or "hub," primarily because of the incentives offered by the city of Memphis and the state of Tennessee.
FALSE
FedEx chose Memphis, Tennessee, as its U.S. hub because:
A) the city is in
the center of the United States, geographically.
B) the airport has relatively few hours of bad weather closures.
C) it needed a means to reach cities to which it did not have direct flights.
D) the firm believed that a hub system was superior to traditional city-to-city flight scheduling.
E) All of the above are true.
E) All of the above are true.
Which of the following statements regarding FedEx is
TRUE?
A) Its hub in Memphis, Tennessee, was selected because of its low cost.
B) Memphis, Tennessee, is the only hub in the company's global flight network.
C) FedEx believes the hub system helps reduce mishandling and delays due to better controls.
D) FedEx uses a hub system in the United States, but a city-to-city network in other countries.
E) Memphis is FedEx's only hub airport in the United States.
C) FedEx believes the hub system helps reduce mishandling and delays due to better controls.
Industrial location analysis typically attempts to:
A) minimize costs.
B) maximize sales.
C) focus more on human resources.
D) avoid countries with strict environmental regulations.
E) ignore exchange rates and currency risks.
A) minimize costs.
A location decision for a traditional department
store (e.g., Macy's) would tend to have what type of focus?
A) cost focus
B) labor focus
C) revenue focus
D) environmental focus
E) education focus
C) revenue focus
A location decision for an appliance manufacturer would tend to have what type of focus?
A) cost focus
B) focus on finding very highly skilled technicians
C) revenue focus
D) environmental focus
E) education
focus
A) cost focus
Location decisions are often being based on which of the following?
A) ports and rivers
B) rail hubs
C) interstate highways
D) airports
E) all of the above
E) all of the above
FedEx schedules its aircraft using a(n) ________ system, which it credits with reducing package mishandling and delay in transit.
central hub
Why does FedEx use a central hub airline network, rather than a "point-to-point" network? Describe FedEx's approach to choosing its superhub.
The hub system is more centralized, and allows for greater control; greater control reduces package mishandling and transit delays. Also, the hub permits service to a far greater number of points with fewer aircraft than a point-to-point network would. Their U.S. hub in Memphis reflects a need to be geographically centralized, and in a location where schedules can more reliably be kept because weather delays are minimized.
State the fundamental objective of a firm's location strategy. How is this basic objective carried out by industrial or goods-producing firms; how does that differ for service firms?
The fundamental objective is to maximize the benefit of location to the firm. For industrial location decisions, the focus is frequently on minimizing cost, because cost often varies dramatically from one location to another. Service location decisions often focus on maximizing revenues.
(T/F)Lists have been developed that rank countries on issues such as "competitiveness" and "corruption."
TRUE
(T/F)The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit.
TRUE
(T/F)For a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion.
FALSE
(T/F)Unfavorable exchange rates can offset other savings in a location decision.
TRUE
(T/F)An example of an intangible cost, as it relates to location decisions, is the quality of education.
TRUE
(T/F)In location decisions, intangible costs are easier to measure than tangible costs.
FALSE
(T/F)Location decisions are based on many things, including costs, revenues, incentives, attitudes, and intangibles, but not on ethical considerations.
FALSE
(T/F)Manufacturers may want to locate close to their customers if the transportation of finished goods is expensive or difficult.
TRUE
(T/F)One reason for a firm locating near its competitors is the presence of a major resource it needs.
TRUE
Why is Northern Mexico used as a cluster for electronics firms?
A) high traffic flows
B) venture capitalists located nearby
C) natural resources of land and climate
D) NAFTA
E) high per capita GDP
D) NAFTA
Among the following choices, an operations
manager might best evaluate political risk of a country by looking at which type of country ranking?
A) based on competitiveness
B) based on cost of doing business
C) based on corruption
D) based on magnitude of government social programs
E) based on average duration between presidential/prime minister elections
C) based on corruption
________ and currency risks are to key country success factors
as land costs and ________ are to key region success factors.
A) Cultural issues; zoning restrictions
B) Exchange rates; environmental impact
C) Labor cost; proximity to customers
D) Land costs; air and rail systems
E) All of the above are accurate relationships.
C) Labor cost; proximity to customers
Which of the following workers is the most productive?
A) $50 wages, 10 parts produced
B)
$10 wages, 1 part produced
C) $30 wages, 5 parts produced
D) $100 wages, 21 parts produced
E) $500 wages, 100 parts produced
D) $100 wages, 21 parts produced
A employee produces 15 parts during a shift in which he made $90. What is the labor content of the product?
A) $90
B) $5
C) $6
D) $0.167
E) $1,350
C) $6
The
reason fast food restaurants often are found in close proximity to each other is:
A) they enjoy competition.
B) location clustering near high traffic flows.
C) low cost.
D) availability of skilled labor.
E) all of the above.
B) location clustering near high traffic flows.
Currency risk is based on what assumption?
A) Firms that do not continuously innovate will lose market share.
B) Values
of foreign currencies continually rise and fall in most countries.
C) Changing product lines by reacting to every current trend may alienate the customer base.
D) The value of one dollar today is greater than the value of one dollar to be received one year from now.
E) The U.S. stock market fluctuates daily.
B) Values of foreign currencies continually rise and fall in most countries.
Governmental
attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. What is the term associated with this phenomenon?
A) bureaucratic risk
B) political risk
C) legislative risk
D) judicial risk
E) democratic risk
B) political risk
Globalization of the location decision is the result of all EXCEPT which of the following?
A)
market economics
B) higher quality of labor overseas
C) ease of capital flow between countries
D) high differences in labor costs
E) more rapid, reliable travel and shipping
B) higher quality of labor overseas
In location planning, environmental regulations, cost and availability of utilities, and taxes are:
A) global factors.
B) country factors.
C) regional/community factors.
D)
site-related factors.
E) none of the above.
C) regional/community factors.
Which of the following is usually NOT one of the top considerations in choosing a country for a facility location?
A) availability of labor and labor productivity
B) exchange rates
C) attitude of governmental units
D) zoning regulations
E) location of markets
D) zoning regulations
When making a location decision at the country level, which of these would be considered?
A) corporate desires
B) land/construction costs
C) air, rail, highway, waterway systems
D) zoning restrictions
E) location of markets
E) location of markets
Which of these factors would be considered when making a location decision at the
region/community level?
A) government rules, attitudes, stability, incentives
B) cultural and economic issues
C) zoning restrictions
D) environmental impact issues
E) proximity to raw materials and customers
E) proximity to raw materials and customers
When making a location decision at the region/community level, which of these would be considered?
A) government rules, attitudes, stability,
incentives
B) cultural and economic issues
C) cost and availability of utilities
D) zoning restrictions
E) air, rail, highway, waterway systems
C) cost and availability of utilities
Which of these factors would be considered when making a location decision at the site level?
A) government rules, attitudes, stability, incentives
B) cultural and economic issues
C) zoning regulations
D) cost
and availability of utilities
E) proximity to raw materials and customers
C) zoning regulations
Tangible costs include which of the following?
A) climatic conditions
B) availability of public transportation
C) taxes
D) quality and attitude of prospective employees
E) zoning regulations
C) taxes
Intangible costs
include which of the following?
A) quality of prospective employees
B) quality of education
C) availability of public transportation
D) all of the above
E) none of the above
D) all of the above
Which of the following statements regarding "proximity" in the location decision is FALSE?
A) Service organizations find that proximity to market is the most critical primary location factor.
B)
Manufacturers want to be near customers when their product is bulky, heavy, or fragile.
C) Perishability of raw materials is a good reason for manufacturers to locate near the supplier, not the customer.
D) Reduction in bulk is a good reason for a manufacturer to locate near the supplier.
E) Clustering among fast food chains occurs because they need to be near their labor supply.
E) Clustering among fast food chains occurs because they need to be near their labor supply.
Which of the following is the best example of the proximity rule that, for service firms, proximity to market is the most important location factor?
A) Soft drinks are bottled in many local plants, where carbonated water is added to proprietary syrups that may have been shipped long distances.
B) Few people will travel out of state for a routine haircut.
C) Patients will travel very long distances to have their
hernia surgeries performed at Shouldice Hospital.
D) Furniture makers choose to locate near the source of good hardwoods, even though it means locating near other furniture manufacturers.
E) Metal refiners (smelters) locate near mines to accomplish significant weight reduction near the metal's source.
B) Few people will travel out of state for a routine haircut.
________ costs are readily identifiable and can be measured with precision.
Tangible
Political risk, cultural issues, and exchange rates are among those ________ that affect which country will be selected for a location decision.
key success factors
Labor cost per unit is also referred to as ________.
labor content
________ occurs when competing companies locate near each other because of a critical mass of information, talent, venture capital, or natural resources.
Clustering
Identify five factors that have fostered globalization.
Globalization has taken place because of the development of:
(1) market economics;
(2) better international
communications;
(3) more rapid, reliable travel and shipping;
(4) ease of capital flow between countries; and
(5) high differences in labor costs.
Identify five factors that affect location decisions at the site level.
Factors that affect location decisions at the site level include site size and cost; air, rail, highway, waterway systems; zoning restrictions; nearness of services/supplies needed; and environmental impact issues.
What is the role of labor productivity in location decisions?
Labor productivity is the number of units output per hour of labor input. For location decisions, this is more often displayed in the form of "labor content," which is the dollar labor cost per unit. Labor content provides a useful comparison in cases where wage rates and productivities vary greatly from country to country. In short, low productivity can negate low wages.
What is the impact of exchange rates on location decisions?
Exchange rates fluctuate, and they can negate savings from low wage rates.
Why is "quality of life" an element of intangible costs associated with location decisions? Provide an example as part of your discussion.
Quality of life affects location decisions in at least one indirect way. Consider a firm that has narrowed its location to two cities. One city has an abundance of educational and recreational facilities, good hospitals and parks. The other has very little of these elements. If you were a prospective employee, in which city would you rather live? Low quality of life can drive up labor costs, and it might also have an impact on training costs and health care costs.
"Proximity" or closeness implies that a firm should locate "close" to something. What are the three kinds of proximity described in the text? What are the basic conditions under which each is appropriate? What kinds of firms are likely to use each of these?
The three are proximity to markets, proximity to suppliers, and proximity to competitors. Proximity to markets is appropriate when customers will not travel far to get the good or service, or when delivering the product to the customer is costly or difficult. Many services must be close to their markets, as must home construction. Proximity to suppliers is appropriate when raw materials are perishable, or when supplies are costly or bulky to transport. Seafood processors need to be near the docks, and smelters need to be near the mines. Proximity to competitors reflects a kind of synergy-retailers find that volume is higher when there are more competitors nearby, because this clustering brings higher traffic counts.
What is it called when competing companies locate next to each other? Why do they do this?
It is called clustering. In many cases, this occurs because of a critical mass of information, talent, venture capital, or natural resources. Alternately, clustering occurs because several firms close together create a larger total market than the same firms separated.
(T/F)The graphic approach to locational cost-volume analysis displays the range of volume over which each location is preferable.
TRUE
(T/F)The factor-rating method can consider both tangible and intangible costs.
TRUE
(T/F)The center-of-gravity method finds the location of a centralized facility, such as a distribution center, that will maximize the organization's revenue.
FALSE
(T/F)The transportation model calculates an optimal shipping system between a central facility and several outlying customers.
FALSE
Which of the following statements regarding the center-of-gravity method is FALSE?
A) It is designed to minimize the
maximum possible travel distance to any of the locations.
B) The optimal x- and y-coordinates are calculated separately.
C) The optimal solution is unconstrained, so it could suggest a location in the middle of a body of water.
D) The weights used are the quantity of goods moved to or from each location.
E) The origin of the coordinate system and the scale used are arbitrary, just as long as the relative distances are correctly represented.
A) It is designed to minimize the maximum possible travel distance to any of the locations.
Community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods?
A) transportation method
B) locational cost-volume analysis
C) center-of-gravity method
D) simulation
E) factor-rating method
E) factor-rating method
Which of the following methods best considers intangible costs related to a location decision?
A) crossover methods
B) locational cost-volume analysis
C) factor-rating method
D) the transportation method
E) center-of-gravity method
C) factor-rating method
Evaluating location alternatives by comparing their composite (weighted-average) scores involves which of the
following?
A) factor-rating analysis
B) cost-volume analysis
C) transportation model analysis
D) linear regression analysis
E) crossover analysis
A) factor-rating analysis
Which of the following is an approach to location analysis that includes both qualitative and quantitative considerations?
A) locational cost-volume analysis
B) factor-rating method
C) transportation model
D)
center-of-gravity method
E) make-or-buy analysis
B) factor-rating method
On the crossover chart where the costs of two or more location alternatives have been plotted, the quantity at which two cost curves cross is the quantity where:
A) fixed costs are equal for two alternative locations.
B) variable costs are equal for two alternative locations.
C) total costs are equal for all alternative
locations.
D) fixed costs equal variable costs for one location.
E) total costs are equal for two alternative locations.
E) total costs are equal for two alternative locations.
The center-of-gravity method is used primarily to determine what type of locations?
A) service locations
B) manufacturing locations
C) distribution center locations
D) supplier locations
E) call center
locations
C) distribution center locations
A regional bookstore chain wants to build a distribution center that is centrally located for its eight retail outlets. It will most likely employ which of the following tools of analysis?
A) assembly line balancing
B) load-distance analysis
C) center-of-gravity method
D) linear programming
E) locational cost-volume analysis
C) center-of-gravity method
Production and transportation costs are always considered in which of the following location decision methods?
A) traffic counts
B) transportation model
C) purchasing power
D) proximity of markets
E) clustering
B) transportation model
The transportation model, when applied to location analysis:
A) minimizes total fixed
costs.
B) minimizes total production and transportation costs.
C) minimizes total transportation costs.
D) maximizes revenues.
E) minimizes the movement of goods.
B) minimizes total production and transportation costs.
The ________ method is popular because a wide variety of factors, from education to recreation to labor skills, can be objectively included.
factor-rating
The ________ is a mathematical technique used for finding the best location for a single distribution point that services several stores or areas.
center-of-gravity method
The ________ is used to determine the best pattern of shipments from several points of supply to several points of demand.
transportation model
Identify the four major quantitative methods for solving location problems.
Factor-rating method, locational cost-volume analysis, center-of-gravity method, and transportation model.
What are the advantages and disadvantages of the use of the factor-rating method?
Factor rating can handle a mix of quantitative and qualitative variables; its calculations are simple and straightforward. Factor rating is subject to sensitivity to small swings in weights and scores, and is subject to subjectivity (different judges see different scores for same site).
What kinds of location decisions are appropriate for the use of locational cost-volume analysis? Write a brief paragraph explaining how the method can assist an operations manager in choosing among alternative sites in making a location decision.
Crossover analysis is appropriate when the primary focus of a location decision is cost. For each alternative site, crossover analysis constructs a total cost curve composed of a fixed cost and a variable cost that depends upon volume. Where these cost curves intersect (or cross over) is the point at which two alternatives have the same cost. The graph of the cost curves of all alternative sites will display the range of volumes over which each site has the lowest cost of all alternatives.
What kinds of location decisions are appropriate for the use of center-of-gravity analysis? What variable is being optimized in this analysis?
The center-of-gravity technique is appropriate when the location decision must find a single centrally-located site to serve any number of outlying points; locating a distribution center to serve a dozen retail stores is an example. The analysis leads to a location that (approximately) minimizes the distribution cost (or total distance traveled) between all outlying points and the center or hub.
(T/F)Service firms choose locations based, in part, on the revenue potential of a site.
TRUE
(T/F)The location decisions of goods-producing firms will generally pay more attention to parking, access, and traffic counts than will service location decisions.
FALSE
(T/F)Location decisions of goods-producing companies often assume that costs are relatively constant for a given area; therefore, the revenue function is critical.
FALSE
Which of the following is NOT among the eight determinants of revenue and volume for a
service firm?
A) quality of management
B) shipment cost of finished goods
C) purchasing power of the customer-drawing area
D) uniqueness of the firm's and the competitors' locations
E) competition in the area
B) shipment cost of finished goods
Which of the following is among the eight determinants of revenue and volume for a service firm?
A) uniqueness of the firm's and the competitors'
locations
B) quality of the competition
C) quality of management
D) purchasing power of the customer-drawing area
E) all of the above
E) all of the above
Traffic counts and purchasing power analysis of drawing area are techniques associated with:
A) locational cost-volume analysis.
B) a manufacturing location decision.
C) a retail or professional service location decision.
D) the
factor-rating method.
E) the transportation model.
C) a retail or professional service location decision.
La Quinta Inns has a competitive edge over its rivals because it:
A) uses regression analysis to determine which variables most influence profitability.
B) has better television advertisements.
C) picks larger locations than its rivals.
D) builds only along interstate highways.
E)
consistently receives four-star ratings for its inns.
A) uses regression analysis to determine which variables most influence profitability.
Which of the following is NOT one of the predictive variables chosen by the profitability regression model used by La Quinta Inns?
A) the price of the inn
B) median income levels
C) the state population per inn
D) the location of nearby colleges
E) the number
of inns in a region
E) the number of inns in a region
Traffic counts and demographic analysis of drawing area are associated with:
A) the center-of-gravity method.
B) manufacturing location decisions.
C) service location decisions.
D) the transportation model.
E) locational cost-volume analysis.
C) service location decisions.
Location analysis techniques typically employed by service organizations include:
A) the factor rating method.
B) the center-of-gravity method.
C) purchasing power analysis of area.
D) traffic counts.
E) all of the above.
E) all of the above.
Which of the following is most likely to affect the location decision of a service firm rather than a manufacturing firm?
A) energy and
utility costs
B) attitude toward unions
C) parking and access
D) cost of shipping finished goods
E) labor costs
C) parking and access
Which of the following is a location analysis technique typically employed by a service organization?
A) purchasing power analysis
B) linear programming
C) queuing theory
D) transportation method
E) locational cost-volume analysis
A) purchasing power analysis
A jewelry store is more likely than a jewelry manufacturer to consider ________ in making a location decision.
A) transportation costs
B) cost of raw materials
C) appearance/image of the location
D) quality of life
E) taxes
C) appearance/image of the location
Which of the following is a location analysis
technique typically employed by a manufacturing organization?
A) transportation method
B) queuing theory
C) correlation analysis and traffic counts
D) simulation
E) demographic analysis
A) transportation method
Which of the following assumptions is NOT associated with strategies for goods-producing location decisions?
A) Most major costs can be identified explicitly for each site.
B) Focus
on identifiable costs.
C) High customer-contact issues are critical.
D) Intangible costs can be evaluated.
E) Location is a major determinant of cost.
C) High customer-contact issues are critical.
Which of the following is most likely to affect the location strategy of a manufacturing firm?
A) appearance/image of the area
B) utility costs
C) purchasing power of drawing area
D) competition in
the area
E) parking availability
B) utility costs
Industrial firms choose locations that minimize cost, but service firms look for locations with good demographics and traffic count because these variables are indicators of good ________.
revenue or volume of business
Service location strategies and goods-producing location strategies rely on very different sets of assumptions. What are the assumptions associated with goods-producing locations? How do these assumptions lead to a location strategy?
The assumptions for goods-producing locations are: (1) location is a major determinant of cost; (2) most major costs can be identified explicitly for each site; (3) low customer contact allows focus on the identifiable costs; and (4) intangible cost can be objectively evaluated. On the basis of these assumptions, the location strategy for goods-producing firms is usually aimed at minimizing cost.
How do service facility location decisions differ from industrial location decisions in terms of the techniques used to analyze them?
Service location decisions tend to focus on the revenue function, whereas manufacturing/industrial location decisions tend to focus on costs. The service sector uses techniques such as regression analysis, traffic counts, demographic analysis, purchasing power analysis, and GIS. Services do share two methods with manufacturing firms: the factor-weighting approach and the center-of-gravity method.
Identify the four predictive variables chosen by the profitability regression model used by La Quinta Inns. Identify some that were tested but not included in the final model.
The
variables are:
(1) the price of the inn,
(2) median income levels,
(3) the state population per inn, and (4) the location of nearby colleges. Some of those tested that did not have a large impact on profits include: the number of hotel rooms in the vicinity and their average room rates; local attractions such as office buildings and hospitals that drew potential customers to a 4-mile trade area; local population and unemployment rate; the number of inns in a region; and physical
characteristics of the site, such as ease of access or sign visibility.
What describes a system that stores and displays information that can be linked to a geographic location?
A) AIS
B) LOC
C) GLOC
D) LIS
E) GIS
E) GIS
Geographic information systems can assist the location decision by:
A) automating center-of-gravity problems.
B)
computerizing factor-rating analysis.
C) combining geography with demographic analysis.
D) updating transportation method solutions.
E) providing good Internet placement for virtual storefronts.
C) combining geography with demographic analysis.
Databases containing such variables as street maps, utilities, population age and income, and the software that analyzes such data for location decisions, are referred to as ________.
geographic information systems or GIS
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