ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager of productions and operations has three possible locations to choose from. His assistant recommends that he use break-even analysis location technique to help determine which location is best based on costs. Assuming: Total fixed cost = 80,000 Price per unit= 20 AVC (Average variable cost) = 40 Break-even point= Total fixed cost / (AVC-Price per unit) Break-even point = 80,000/ (40-20) Break-even point = 4,000 1) Demonstrate to the OM manager how to go about choosing the best location using the numerical example designed above.

ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager of productions and operations has three possible locations to choose from. His assistant recommends that he use break-even analysis location technique to help determine which location is best based on costs. Assuming: Total fixed cost = 80,000 Price per unit= 20 AVC (Average variable cost) = 40 Break-even point= Total fixed cost / (AVC-Price per unit) Break-even point = 80,000/ (40-20) Break-even point = 4,000 1) Demonstrate to the OM manager how to go about choosing the best location using the numerical example designed above.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter6: Optimization Models With Integer Variables

Section: Chapter Questions

Problem 100P

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