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Why do mining companies, oil refiners, paper mills, and food processors locate close to their sources?
ABecause their customers all live near those sources
BBecause local governments there offer the largest tax breaks
CBecause they use heavy or bulky raw materials
DBecause they need the most highly educated workforce
Answer & Solution
Correct answer: C. Because they use heavy or bulky raw materials
1. Companies that use heavy or bulky raw materials face very high inbound freight costs.
2. Locating close to the supplier shortens that expensive leg of the journey.
3. So mining companies sit near ore deposits, oil refiners near oil fields, paper mills near forests, and food processors near farms.
4. Tax breaks and workforce education matter elsewhere in the decision, but they do not explain this particular pattern.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 10 "Achieving World-Class Operations Management", section Availability of Production Inputs_
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