Assume we can only choose from one of the sitesize options

Question

CASE: Selecting Retail Outlets Using Huff Location Model

Consider the following retail market information.

- Competitors: Store A (size = 20K SF) and Store B (size = 30K SF)

- Potential store sites: X, Y and Z

- Maximum store size at each site: X ≤ 20K SF, Y ≤ 30K SF, Z ≤ 40K SF

- There are 10 customer areas. Number of Households (Ci) and Average Annual Budget per Household (Bi) are given below:

	1	2	3	4	5	6	7	8	9	10
Ci	672	1,072	977	577	102	47	67	412	247	1,697
Bi	$233	$178	$333	$403	$128	$103	$113	$168	$143	$318

- The minimum travel times from various sites to customer areas are given as follows:

	1	2	3	4	5	6	7	8	9	10
A	20	18	18	20	17	12	11	10	8	7
B	16	14	14	16	13	9	8	7	6	7
X	12	10	10	12	9	7	6	9	8	13
Y	14	12	12	14	11	7	7	6	5	8
Z	11	9	9	13	5	7	8	9	11	14

- The net operating profit margins are estimated as follows based on store size:

SIZE	Margin of Total Revenue
20K SF	4.25%
30K SF	3.75%
40K SF	3.00%

Assignments:

1) Use λ=2 in the Huff location model to evaluate the following possible site/size options, one at a time, for the new retail store.

a) X,20K

b) Y,20K

c) Y,30K

d) Z,20K

e) Z,30K

f) Z,40K

Assume we can only choose from one of the site/size options from a) to f) above, which store site/size option will yield the maximum profit? Which store site/size option will yield the maximum market share?

2) Redo the evaluations in 1) above with λ=4 in the Huff location model. Again, if we can only choose from one of the site/size options from

a) to f) above, which store site/size option will yield the maximum profit? Which store site/size option will yield the maximum market share?

Answer 1

Consider the case named ‘Selecting Retail Outlets Using Huff Location Model’ and by using the facts and figures and retail market information, respond to the following questions by providing a word paper including the complete computation part. 1) Make use of ?=2 in the Huff location model to assess the given possible site/size options, one at a time, for the latest retail store. a) X,20K b) Y,20K c) Y,30K d) Z,20K e) Z,30K f) Z,40K Suppose we can just select from one of the site or size options from a) to f) above, name the store site/size option will outcome the maximum profit? Name the store site/size option will outcome the maximum market share? 2) Redo the assessments in (1) above having ?=4 in the Huff location model. Again, if we can just select from one of the site or size options from a) to f) above, which store site/size option will outcome the maximum profit?