A manufacturer produces some output called "Product" using a raw material called Input". To production of 1 ton of Product requires 3/5 ton of Input. The manufacturer has a contract to deliver 50 tons of Product to Store M (Store M is the "market" for Product). Input is available in Spot N (Spot N is the source of Input, equivalent to "mine" om the Spot N. The ship Product and Input are $2 per ton per mile. We will help the manufacturer to find the total transport-cost minimizing factory location. To arrive at the answer, go through the following steps in parts (a), (b) and (c). (a) First consider two potential locations for the factory: Spot N and Store M. Calculate shipping costs by filling in the cells of the table below. Show your calculations Location of Factory Spot N Store M Input Shipping Cost Total Shipping Cost
A manufacturer produces some output called "Product" using a raw material called Input". To production of 1 ton of Product requires 3/5 ton of Input. The manufacturer has a contract to deliver 50 tons of Product to Store M (Store M is the "market" for Product). Input is available in Spot N (Spot N is the source of Input, equivalent to "mine" om the Spot N. The ship Product and Input are $2 per ton per mile. We will help the manufacturer to find the total transport-cost minimizing factory location. To arrive at the answer, go through the following steps in parts (a), (b) and (c). (a) First consider two potential locations for the factory: Spot N and Store M. Calculate shipping costs by filling in the cells of the table below. Show your calculations Location of Factory Spot N Store M Input Shipping Cost Total Shipping Cost
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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