MNO2610
Assessment 02
Semester 2 2025
Due September 2025
, MNO2610
Assessment 02
Semester 2 2025
Due September 2025
Operations Management IIA
1. Location Evaluation Techniques for Recommending a Distribution Center in
South Africa
As operations manager for a growing e-commerce company, I recommend
Johannesburg (Gauteng region) as the most suitable location for establishing a new
distribution center in South Africa. This recommendation is grounded in the systematic
application of three location evaluation techniques: Location Cost–Profit–Volume
(CVP) Analysis, the Factor Rating Method, and the Center of Gravity Method.
While Durban emerges as a compelling alternative, especially for import-heavy
operations due to its port access, Johannesburg ultimately provides superior long-term
strategic advantages, balancing cost efficiency with market accessibility.
1.1 Location Cost–Profit–Volume (CVP) Analysis
This quantitative technique, also known as break-even analysis, compares fixed and
variable costs across potential sites to determine which location minimizes total costs or
maximizes profit at expected sales volumes. Fixed costs include land acquisition and
warehouse setup, while variable costs reflect transportation per unit. By plotting cost
curves for candidate sites, managers identify the break-even volume at which one
location overtakes another in profitability (Heizer et al., 2020).
Assessment 02
Semester 2 2025
Due September 2025
, MNO2610
Assessment 02
Semester 2 2025
Due September 2025
Operations Management IIA
1. Location Evaluation Techniques for Recommending a Distribution Center in
South Africa
As operations manager for a growing e-commerce company, I recommend
Johannesburg (Gauteng region) as the most suitable location for establishing a new
distribution center in South Africa. This recommendation is grounded in the systematic
application of three location evaluation techniques: Location Cost–Profit–Volume
(CVP) Analysis, the Factor Rating Method, and the Center of Gravity Method.
While Durban emerges as a compelling alternative, especially for import-heavy
operations due to its port access, Johannesburg ultimately provides superior long-term
strategic advantages, balancing cost efficiency with market accessibility.
1.1 Location Cost–Profit–Volume (CVP) Analysis
This quantitative technique, also known as break-even analysis, compares fixed and
variable costs across potential sites to determine which location minimizes total costs or
maximizes profit at expected sales volumes. Fixed costs include land acquisition and
warehouse setup, while variable costs reflect transportation per unit. By plotting cost
curves for candidate sites, managers identify the break-even volume at which one
location overtakes another in profitability (Heizer et al., 2020).
