Athol Furniture, Inc.

Group 6 Kathik Vijayan Razy Abdulla Sukesh Kumar Praveen S

Athol Furniture, Inc.

Growing regional chain of discount furniture and largeappliance stores Want to open next retail outlet at Bluff Lake Wants to decide among three possible locations X, Y and Z using Huff location model Competitor stores are located at A and B The market is divided into 12 areas with population and expenditure data given for each area Store sizes, travel times are given. Net operating profit as a percentage of sales is given for each store size. Location is chosen based on net operating profit Excel spreadsheets showing calculations is attached separately

Net operating profits ($) for =1

10,000 sq. ft 15,000 sq. ft 20,000 sq. ft

15163

18406

NA*

Y
Z

16105
14879

19718
NA

19003
NA

* The maximum area for stores at locations X, Y, Z are respectively 15000, 20000 and 10000 sq.ft

It is recommended to build the new retail outlet at Y with an area of 15000 sq. ft

 For the recommended outlet (Y, area 15000 sq.ft),

Expected annual net operating profit before taxes = $ 19718 Expected market share = 33.06%

 To see the sensitivity of customer travel propensity () on market share values, let us tabulate the market shares for various vlaues for a store space of 10000 sq. ft
0.5 1 5

X Y Z

26.23% 27.24% 25.55%

We see that: Location Y is most sensitive to

23.47% 24.92% 23.03%

15.51% 10.79% 25.19%

Location Z is the least sensitive to

Shortcomings in the model

The attractiveness of a facility depends on many factors such as quality of the products and service, price range offered, brand value etc. These factors are not considered in the model In Huff model, the attractiveness depends on the factor whose value cannot be determined objectively