Principles of Operations Management: Sustainability and Supply Chain Management, Student Value Edition (10th Edition)
10th Edition
ISBN: 9780134183954
Author: HEIZER
Publisher: PEARSON
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Chapter 8, Problem 17P
a)
Summary Introduction
To determine: The preferable location.
Introduction: Location is one of the important element for a business that controls the cost and expenses. Location strategies support in framing other strategies for a firm where optimal location point will provide competitive advantage to a firm.
b)
Summary Introduction
To determine: The change in preferred location when Location Dal fixed cost increases.
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Fall-Line, Inc., is a Great Falls, Montana, manufacturer of a variety of downhill skis. Fall-Line is considering four locations for a new plant: Aspen, Colorado; Medicine Lodge, Kansas; Broken Bow, Nebraska; and Wounded Knee, South Dakota. Annual fixed costs and variable costs per pair of skis are shown in the following table:
Location
Annual Fixed Costs
Variable Cost per Pair
Aspen
Medicine Lodge
Broken Bow
Wounded Knee
$8,000,000
$2,400,000
$3,400,000
$4,500,000
$250
$130
$90
$65
a. Plot the total cost curves for all the communities on a single graph. Identify on the graph the range in volume over which each location would be best.b. What break-even quantity defines each range? Although Aspen’s fixed and variable costs are dominated by those of the other communities, Fall-Line believes that both the demand and the price would be higher for skis made in Aspen than for skis made in the other locations.The following table shows those projections:
Location
Price per…
Fall-Line, Inc., is a Great Falls, Montana, manufacturer of a variety of downhill skis. Fall-Line is considering four locations for a new plant: Aspen, Colorado; Medicine Lodge, Kansas; Broken Bow, Nebraska; and Wounded Knee, South Dakota. Although Aspen's fixed and variable costs are dominated by those of the other communities, Fall-Line believes that both the demand and the price would be higher for skis made in Aspen than for skis made in the other locations. The following table shows those projections along with the annual fixed costs and variable costs per pair of skis for each location:
a. What break-even quantity defines each location?
b. What break-even quantity defines each range?
c. Determine which location yields the highest total profit per year.
d.
Ken Gilbert owns the Knoxville Warriors, a minor league baseball team in Tennessee. He wanted to move the Warriors south, to Mobile (Alabama) or Jackson (Mississippi). The table below provides the factors that Gilbert thinks are important, the weights, and scores for Mobile and Jackson.
a) Which site should he select?b) Jackson just raised its incentive package, and the new score is75. Why doesn’t this impact your decision in part (a)?
Chapter 8 Solutions
Principles of Operations Management: Sustainability and Supply Chain Management, Student Value Edition (10th Edition)
Ch. 8 - Prob. 1EDCh. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQ
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