One of the objectives in facility location analysis is to select a site with the lowest total cost. Which of the following costs are hidden costs that should be included in the analysis?Question 41Answera.Bribery costsb.Taxesc.Construction costsd.Infrastructure costse.Movement of preproduction material between locations
Question
One of the objectives in facility location analysis is to select a site with the lowest total cost. Which of the following costs are hidden costs that should be included in the analysis?Question 41Answera.Bribery costsb.Taxesc.Construction costsd.Infrastructure costse.Movement of preproduction material between locations
Solution
The hidden costs that should be included in the facility location analysis are:
b. Taxes: These are not always apparent upfront but can significantly impact the total cost of a facility location. Different locations can have different tax rates and tax incentives.
c. Construction costs: These include the costs of building the facility itself. While these costs may be apparent, there can be hidden costs such as delays in construction, changes in construction plans, etc.
d. Infrastructure costs: These are the costs associated with setting up the necessary infrastructure for the facility. This can include things like utilities, roads, etc. These costs can vary greatly depending on the location.
e. Movement of preproduction material between locations: This is a cost that is often overlooked. If materials need to be moved from one location to another, this can add significant costs, especially if the locations are far apart.
a. Bribery costs: This is not a legitimate or ethical cost and should not be considered in the facility location analysis.
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