Question
In: Operations Management
Fixed and variable costs for four potential plant locations are shown below: Location Fixed Cost Variable...
Fixed and variable costs for four potential plant locations are shown below:
|
Location |
Fixed Cost |
Variable Cost |
|
per Year |
per Unit |
|
|
A |
$200,000 |
$18 |
|
B |
$120,000 |
$25 |
|
C |
$150,000 |
$20 |
|
D |
$250,000 |
$18 |
not using excel please.
The maximum production volume is 40,000 units.
- Find the best location based on the maximum production volume.
- Find the volume range/location recommendations.
Solutions
Expert Solution
Answer a=
Total cost for location A= 200000+18*40000=920000
Total cost for location B= 120000+25*40000=1120000
Total cost for location C= 150000+20*40000=950000
Total cost for location D= 250000+18*40000=970000
From the above, it is clear that location A has the least cost, so location A should be selected
Answer B=
| Location A | Location B | Location C | Location D | |
| X | 200000+18*X | 120000+25*X | 150000+20*X | 250000+18*X |
| 2000 | 236000 | 170000 | 190000 | 286000 |
| 5000 | 290000 | 245000 | 250000 | 340000 |
| 10000 | 380000 | 370000 | 350000 | 430000 |
| 15000 | 470000 | 495000 | 450000 | 520000 |
| 20000 | 560000 | 620000 | 550000 | 610000 |
| 25000 | 650000 | 745000 | 650000 | 700000 |
| 30000 | 740000 | 870000 | 750000 | 790000 |
| 35000 | 830000 | 995000 | 850000 | 880000 |
| 40000 | 920000 | 1120000 | 950000 | 970000 |
From Table and figure the volume range for the different locations are as below=
Location A= from 25000 units to 40000 units
Location B= from 0 to 7000 units
Location C= from 7000 units to 25000 units
Location D=more than 40000 units
keosha answered 1 year agoRelated Solutions
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