MNO2610
Assessment 02
Semester 2 2025
Due September 2025
, MNO2610
Assessment 02
Semester 2 2025
Due September 2025
1. Location Evaluation Techniques for a Distribution Centre in South Africa
As the operations manager for a growing e-commerce company, I recommend
Johannesburg (Gauteng region) as the optimal location for the new distribution
centre. This recommendation draws on three advanced location evaluation
techniques—each examining different dimensions of efficiency and cost—to justify
Johannesburg's strategic advantage vis-à-vis Durban and Cape Town.
1.1 Location Cost–Profit–Volume (CVP) Analysis
Definition and Utility
The cost–profit–volume or break-even analysis contrasts fixed costs (e.g., land,
construction) and variable costs (e.g., per-unit transportation), enabling managers to
identify the production volume at which one location becomes more cost-effective than
another.
Real-World Example
A U.S. manufacturing firm compared Akron, Bowling Green, and Cleveland, selecting
Bowling Green due to its lower fixed costs ($30,000) and lower variable costs ($75 per
unit), which minimized total cost at forecasted volumes. Domino’s Pizza, conversely,
suffered during its expansion due to underestimated variable costs, underscoring the
risks of superficial CVP analysis.
Assessment 02
Semester 2 2025
Due September 2025
, MNO2610
Assessment 02
Semester 2 2025
Due September 2025
1. Location Evaluation Techniques for a Distribution Centre in South Africa
As the operations manager for a growing e-commerce company, I recommend
Johannesburg (Gauteng region) as the optimal location for the new distribution
centre. This recommendation draws on three advanced location evaluation
techniques—each examining different dimensions of efficiency and cost—to justify
Johannesburg's strategic advantage vis-à-vis Durban and Cape Town.
1.1 Location Cost–Profit–Volume (CVP) Analysis
Definition and Utility
The cost–profit–volume or break-even analysis contrasts fixed costs (e.g., land,
construction) and variable costs (e.g., per-unit transportation), enabling managers to
identify the production volume at which one location becomes more cost-effective than
another.
Real-World Example
A U.S. manufacturing firm compared Akron, Bowling Green, and Cleveland, selecting
Bowling Green due to its lower fixed costs ($30,000) and lower variable costs ($75 per
unit), which minimized total cost at forecasted volumes. Domino’s Pizza, conversely,
suffered during its expansion due to underestimated variable costs, underscoring the
risks of superficial CVP analysis.
