5.a. A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $185 in either case. Using the following information, determine which location would produce the greater profit. Omaha Kansas City Annual fixed costs ($ millons) $1.2 $1.4 Variable cost per unit $36 $47 Expected annual demand (units) 8,000 12,000

5.a. A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $185 in either case. Using the following information, determine which location would produce the greater profit. Omaha Kansas City Annual fixed costs ($ millons) $1.2 $1.4 Variable cost per unit $36 $47 Expected annual demand (units) 8,000 12,000

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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Question

3.a. Use three processes(FCFS,SPT and EDD) of scheduling for the following sequence.
Job
Processing Time
Due date
W
8
21
V
12
19
7
27
b.Y
11
16
b. Illustrate the need for location decisions.

5.a. A newly formed firm must decide on a plant location. There are two alternatives under consideration:
locate near the major raw materials or locate near the major customers. Locating near the raw materials
will result in lower fixed and variable costs than locating near the market, but the owners believe there
would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be
$185 in either case. Using the following information, determine which location would produce the greater
profit.
Omaha
Kansas City
Annual fixed costs ($ millions)
$1.2
$1.4
Variable cost per unit
$36
$47
Expected annual demand (units)
8,000
12,000
b. A small producer of machine tools wants to move to a larger building, and has identified two
alternatives. Location A has annual fixed costs of $800,000 and variable costs of $14,000 per unit;
location B has annual fixed costs of $920,000 and variable costs of $13,000 per unit. The finished items
sell for $17,000 each. At what volume of output would the two locations have the same total cost?

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