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Business Management in Choosing Location

Question 1:

Fresh Burger is a locally owned fast-food chain that is currently considering the possibility of opening a new branch in Jubail. There are currently 3 options for the new site location:  The first option is to rent a space in a popular area that is a walking distance away from both Sudair district and Al Nakheel beach. The annual rent for this option is 180,000 SR.

The second option is to rent a space in the male branch of Jubail University College (the College is open for 8 hours). Annual rent is 100,000 SR. The third option is in Fanateer Mall, which has plenty of parking. Although the restaurant would be located on the second floor, it is reasonably priced with an annual rent of 150,000 SR.

  1. Develop a recommendation to the operation manager regarding which site their new branch should be located, include the following in your recommendation:
    1. What is the main objective that the location decision should be based on? And Why? (2 marks).
    2. Briefly discuss at least 3 factors that facilitated your decision of the preferred location? (Hint: Your analysis should be based on the knowledge you gained from Operation Management course as well as your background information of the site options). (3 marks)
  2. What process strategy is most appropriate for a restaurant? What are the characteristics of this process strategy in terms of volume and variety? (2 marks)


Note: your answer should be in your own words and the length should be around half a page: Spacing 1.5, Font 12).



Question 2:

Nora is thinking about opening a cupcake shop and needs to buy a cake blender. Blender A has fixed costs of 100 SR and variable costs of 1 SR /unit. Blender B has fixed costs of 500 SR and variable costs of 0.5 SR /unit.

  1. Using a graph, draw the total cost line for each option? ( 5 marks)
  2. By looking at the graph, what is the volume at which the total cost of the two options are equal? (2 marks)
  3. If Nora plans to sell 500units of cupcakes, which machine should she choose? What would be her profit if the selling price is 5 SR per cupcake? (3 marks)

Question 3:

East Texas Seasonings is preparing to build one processing center to serve its four sources of seasonings. The four source locations are at coordinates shown below. Also, the volume from each source is provided.

Demand X-Coord. Y-Coord.
Athens, Texas 19,000 130 20
Beaumont, Texas 3,000 40 60
Carthage, Texas 5,000 100 70
Denton, Texas 6,000 30 90


  1. Plot the coordinates of the locations on the graph? (4 marks)
  2. What should be the map coordinates of the new processing center? Show your calculation and then plot the coordinates on the graph? (5 marks)


Question 4:

Develop a solution for the following line balancing problem, allowing a cycle time of 5 minutes.

(10 Marks)

Work Task Task Time (seconds) Task Predecessor(s)
A 120
B  60 A
C 120 B
D 100 B
E 200 C, D


  1. Draw the precedence diagram for the set of tasks. (2 Marks)
  2. Calculate the theoretical minimum number of workstations. (2 Marks – write the formula)
  3. Balance this line using the longest task time. (2 Marks)
  4. What is the minimum and maximum possible cycle time, regardless of the product schedule? (2 marks)
  5. What is the efficiency of this line? (2 marks)



Question 5:

The tasks performed on an assembly line are observed using a sample of five people performing these tasks.                                                                                                   (9 Marks)


Observations (times in minutes)
Element Performance Rating 1 2 3 4 5
1 70% 5.8 2.2 2.1 2.3 2.0
2 120% 3.2 3.3 3.4 3.3 3.5
3 100% 1.4 1.3 4.7 1.6 1.5


Disregard the outliers from the sample observations. Determine the normal and standard time for the tasks by assuming a 15% allowance factor. (round your answers to two decimal places)



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Category: Sample Questions