a)
To determine: The output at which two locations will have same profit.
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)
To determine: The output at which location B will have high profit than location Mc.
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.
c)
To determine: The output at which location Mc will have high profit than location B.
d)
To determine: The break-even point of each location.
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OPERATIONS MANAGEMENT CUSTOM 12E >C<
- ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager ofproductions and operations has three possible locations to choose from. His assistantrecommends that he use break-even analysis location technique to help determine whichlocation 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 thenumerical example designed above.arrow_forwardThe fixed and variable costs for three potential manu-facturing plant sites for a rattan chair weaver are shown: SITE FIXED COST PER YEAR VARIABLE COST PER UNIT1 $ 500 $112 1,000 73 1,700 4a) Over what range of production is each location optimal?b) For a production of 200 units, which site is best?arrow_forwardPeter Billington Stereo, Inc., supplies car radios to auto manufacturers a nd is going to open a new plant. The company is undecided between Detroit and Dallas as the site. The fixed costs in Dallas are lower due to cheaper land costs, but the variable costs in Dallas are higher because shipping distances would increase. Given the following costs: a) Perform an analysis of the volume over which each location is preferable.b) How does your answer change if Dallas's fixed costs increase by 10%?arrow_forward
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