The Fernandez Family Tortilla Company has made tortillas by hand for 50 years and sold

them at the grocery stores in their small hometown of Pecos, Texas, in a remote area of
West Texas. Recently a traveling businessman had one of these tortillas and was so
impressed that he believed the company could become the most popular tortilla brand in
the country based on taste alone. He told Fred Fernandez, the company’s CEO, that he
would invest in a new production facility for the company so they could mass produce
tortillas.

Every tortilla is made using a specific blend of two types of corn that are only grown in the
Southwestern United States, particularly Texas, New Mexico, and Arizona. Also, the left
over corn that is not used to make tortillas is very expensive to dispose of unless you can
dispose of it as cattle feed. Nearly 75% of the customers who purchase tortillas regularly
reside in those states plus Southern California. The family’s technique for pressing the
tortillas is one that is unique to the village their grandmother grew up in – Guanajuato,
Mexico. In order to mass produce the tortillas, the company would need to hire people who
know this technique. There are two cities with a large concentration of immigrants from
Guanajuato. One is Amarillo, Texas, and the other is Bakersfield, California. There is
currently a tax credit for producers of food products available in Texas and New Mexico.
There are 2 major highways that are known as the Tortilla Trails because they run through
the areas of the country where tortillas are most popular. One of those highways is I-10,
which runs through El Paso in Texas, Las Cruces in New Mexico, Tucson and Phoenix in
Arizona, and eventually Los Angeles in Southern California. The other is I-40, which runs
through Amarillo in Texas, Albuquerque in New Mexico, Flagstaff in Arizona, and
eventually Los Angeles in Southern California. The two highways run very close to each
other north of Phoenix, and are thus easily accessible for anyone located in Phoenix.

Recently, Fred took a tour of several potential locations for their new facility. His first stop
was in Lovington, New Mexico, which is several hours from either Tortilla Trail in far
Eastern New Mexico. His second stop was Amarillo, Texas, which based on the smell
outside appeared to be a major cattle raising town. His final stop was in Phoenix, Arizona.

Fred has hired your consulting firm to help him make this decision. Determine where the
best location would be for the new facility and be prepared to explain your decision-making
process and the factors you took into account when making your decision.