Question 102 - CPIM-Part-2 discussion

Locating service facilities differs from locating manufacturing or distribution facilities primarily because service location decisions are driven by revenue concerns, while manufacturing and distribution location decisions are driven by costs. This is because service facilities are usually closer to the customers and depend on their demand and preferences.Service facilities need to consider factors such as customer convenience, accessibility, visibility, traffic, and competition when choosing a location, as these factors affect the revenue potential and market share of the service facility1. Manufacturing and distribution facilities, on the other hand, are usually farther from the customers and depend on their supply chain efficiency and effectiveness.Manufacturing and distribution facilities need to consider factors such as transportation, labor, utilities, taxes, and regulations when choosing a location, as these factors affect the cost structure and profitability of the facility2.

The other options are not correct.Competition is a factor that affects both service and manufacturing or distribution location decisions, as it influences the market attractiveness and strategic positioning of the facility3.Real estate costs are also a factor that affects both service and manufacturing or distribution location decisions, as they represent a significant portion of the fixed costs of the facility4.Surveying customers or suppliers is a method that can be used for both service and manufacturing or distribution location decisions, as it provides valuable information about the demand and supply characteristics of the market5.