n operations manager wants to use cost-profit-volume (CPV) analysis to decide the location of a new production facility. The total cost functions of the two alternative, Location A and Location B, are presented below. Given that the target production quantity (volume) is 10,000 units, which location the operations manager should choose and what is the corresponding total cost of this location Tca=260,000 +10Q Tcb=90,000 + 30Q Location B, $390,000 There is no difference between the two locations Location B, $360,000 Location A, $360,000 Location A, $390,000

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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n operations manager wants to use cost-profit-volume (CPV) analysis to decide the location of a new production facility. The total cost functions of the two alternative, Location A and Location B, are presented below. Given that the target production quantity (volume) is 10,000 units, which location the operations manager should choose and what is the corresponding total cost of this location

Tca=260,000 +10Q

Tcb=90,000 + 30Q

Location B, $390,000
There is no difference between the two locations
Location B, $360,000
Location A, $360,000
Location A, $390,000

 

 

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