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CMA Intermediate · Operations Management and Strategic Management · Introduction to Operations Management

A Pune firm compares two sites for a new unit using the factor rating method. Weights: labour availability 0.40, transport access 0.35, power cost 0.25. Scores out of 100 for Site X are 70, 80, 60 and for Site Y are 90, 60, 70. Which statement is correct?

Site X scores 71 and Site Y scores 74.5 on the weighted factor rating, so Site Y is preferred because it has the higher total weighted score. The calculation multiplies each score by its weight and adds the products for each site.

  1. ASite X scores 71 and is preferred
  2. BSite Y scores 74.5 and is preferredCorrect
  3. CSite Y scores 74.5 and Site X scores 71, so Site X is preferred
  4. DBoth sites score equally at 72.5

Explanation

Site X = 0.40x70 + 0.35x80 + 0.25x60 = 28 + 28 + 15 = 71. Site Y = 0.40x90 + 0.35x60 + 0.25x70 = 36 + 21 + 17.5 = 74.5. Site Y has the higher weighted score and is preferred. Option C is wrong because it picks the lower score.

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