Managerial Economics

Center of Gravity

1. In Mongolia, six laborers, each making the equivalent of USD 3.00 per day, can
produce 40 cabinets per day. In Slovenia, 10 laborers, each making the equivalent of
USD 2.00 per day, can produce 45 cabinets. In Costa Rica, two laborers, each
making USD 60.00 per day, can make 100 cabinets.
a. Based on labor cost only, which location would be most economical to
produce cabinets?
b. Moreover, shipping cost from Mongolia to Trinidad and Tobago, the final
destination of the cabinets, is USD 15.00 per cabinet. Shipping cost from
Slovenia to Trinidad and Tobago is USD 10.00 per cabinet while the
shipping cost from Costa Rica to Trinidad and Tobago is USD 2.50.
Considering both labor and transportation cost, which is the most favorable
production location?
2. Determine the center of gravity using the data shown below. Plot the data and your
results.
Changdeokgung Deoksugung Changgyeonggung Gyeongbokgung
X 200 100 250 500
Y 200 500 600 300
Volume 75 105 135 60
3. Determine the center of gravity using the data shown below. Plot the data and your
results.
Orchard Jurong Marina Bay Somerset
X 300 450 100 700
Y 150 400 350 250
Volume 50 300 100 200
4. Pantasia Bakery is considering the location for its new branch. It has assembled the
following information about its five retail stores, including the location coordinates
and number of monthly production of Ja-pan #32: Wasabi Dinner Bread Ja-pan.
Where must Pantasia build its new branch?
Branch Coordinates Monthly Shipments
Pantasia Tokyo Branch (5, 2) 300,000
Pantasia Fukuoka Branch (5, 5) 400,000
Pantasia Hiroshima Branch (3, 7) 450,000
Pantasia Kyoto Branch (2, 6) 150,000
Pantasia Osaka Branch (6, 4) 250,000
5. Professor Albus Dumbledore took 6 hours to prepare the first lecture in a new
course. Traditionally, he has experienced a 90% learning factor. How much
time should it take him to prepare the 15th lecture?
6. PLDT is installing networks for its client. The first installation took 46 labor-hours
to complete. Estimate how long the 4th and the 8th installations will take for each
of the following learning rates: 95%, 87%, and 72%.