Two alternative locations are under consideration for a new plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson location is superior in terms ofcosts. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm'scustomers prefer local suppliers. The selling price of the product is $400 per unit in either case. Use the following information to determine which locationyields the higher total profit per year:iThe annual profit from Jackson is $The annual profit from Dayton is $Annual FixedCostLocationJacksonDayton$1,000,000$3,250,000(Enter your response as an integer.)(Enter your response as an integer.)Variable Costper Unit$45$70Forecasted Demandper Year40,000 units25,000 units

Total cost = Annual fixed cost + (variable cost per unit x annual demand)Annual revenue = Selling…

Answered: Two alternative locations are under…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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An operations manager narrowed the search for a new facility location to four communities. The annual fixedcosts (land, property taxes, insurance, equipment, and buildings) and the variable costs (labor, materials, trans-portation, and variable overhead) are as follows: Notice that no community dominates the set of alternatives; that is, no community has both the lowestfixed costs and the lowest variable costs per unit. If that were so, that community would be the best location.Step 1. Plot the total cost curves for all the communities on a single graph. Identify on the graph theapproximate volume range over which each community provides the lowest cost.Step 2. Using break-even analysis, calculate the break-even quantities over the relevant ranges. If theexpected demand is 15,000 units per year, what is the best location?
Shoeless Joe is a specialty retailer that is deciding where tolocate a new facility. Th e annual fi xed and variable costs for eachpossible site have been estimated as follows: If demand is expected to be 2000 units, which location is best?
Two alternative locations are under consideration for a new plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson location is superior in terms of costs. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm’s customers prefer local suppliers. The selling price of the product is $250 per unit in either case. Use the following information to determine which location yields the higher total profit per year: Location AnnualFixed Cost Variable Costper Unit ForecastDemand per Year Jackson Dayton $1,500,000 $2,800,000 $50 $85 30,000 units 40,000 units
An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. Location Fixed Cost Variable Cost A $100,000 $10 B $150,000 $7 C $200,000 $5 Plot the total cost curves in a line chart and identify the range over which each location would be best.
Discuss why locating a plant solely on the basis of low labor costs may be the wrong approach ?
Wiebe Trucking, Inc., is planning a new warehouse to servethe western United States. Denver, Santa Fe, and Salt LakeCity are under consideration. For each location, annual fixedcosts (rent, equipment, and insurance) and average variablecosts per shipment (labor, transportation, and utilities) arelisted in the following table. Sales projections range from550,000 to 600,000 shipments per year.a. Plot the total cost curves for all the locations on a singlegraph.b. Which city provides the lowest overall costs?
The Quick Copy center for document copying is decidingwhere to locate a new facility. Th e annual fi xed and variable costsfor each site it is considering have been estimated as follows: If demand is expected to be 3000 units, which location is best?
Accel Express, Inc., collected the following information on where to locate a warehouse (1 = poor, 10 = excellent): Location Score Location Factor Factor Weight A B Construction costs 10 8 5 Utilities available 10 7 7 Business services 10 4 7 Real estate cost 20 7 4 Quality of life 20 4 8 Transportation 30 7 6 a. Which location, A or B, should be chosen on the basis of the total weighted score?b. If the factors were weighted equally, would the choice change?
a. Which location, A or B, should be chosen on the basis of the total weighted score? b. If the factors were weighted equally, would the choice change?
Wiebe Trucking, Inc., is planning a new warehouse to servethe western United States. Denver, Santa Fe, and Salt LakeCity are under consideration. For each location, annual fixedcosts (rent, equipment, and insurance) and average variablecosts per shipment (labor, transportation, and utilities) arelisted in the following table. Sales projections range from500,000 to 600,000 shipments per year. a. Plot the total cost curves for all the locations on a singlegraph.b. Which city provides the lowest overall costs?
Let us assume that a new medical facility, Health-care, is to be located in ABC city. The location factors, weights, and scores (1 = poor, 5 = excellent) for three potential sites are shown in the following table. What is the weighted score for these sites? Which is the best location Sr. Location factor Weight Scores Location 1 Location 2 Location 3 1 Facility utilization 25 3 5 6 2 Total patient per month 25 4 3 5 3 Average time per emergency trip 20 4 3 5 4 Land and construction costs 15 1 4 2 5 Employee preferences 25 5 3 5
The owners of Speedy Logistics, a company that providesovernight delivery of documents, are considering where to locatetheir new facility in the Midwest. Th ey have narrowed their searchdown to two locations and have decided to use factor rating tomake their decision. They have listed the factors they considerimportant and assigned a factor score to each location basedon a fi ve-point scale. Th e information is shown here. Using theprocedure for factor rating, decide on the better location

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