A newly formed firm must decide on a plant location. There are 2 alternatives under consideration: locate near the major raw materials of locate near the the major customers. Locating near the raw materials will result in lower fixed costs and variable costs than locating near the market, but the owners believe ther 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 greater profit.. Annual Fixed costs Omaha $1.2 million, Kansas City $1.4 million Variable cost per unit Omaha $26, Kansas City $47 Expected annual demand Omaha 8000 units, Kansas City 12000 units.
A newly formed firm must decide on a plant location. There are 2 alternatives under consideration: locate near the major raw materials of locate near the the major customers. Locating near the raw materials will result in lower fixed costs and variable costs than locating near the market, but the owners believe ther 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 greater profit.. Annual Fixed costs Omaha $1.2 million, Kansas City $1.4 million Variable cost per unit Omaha $26, Kansas City $47 Expected annual demand Omaha 8000 units, Kansas City 12000 units.
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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A newly formed firm must decide on a plant location. There are 2 alternatives under consideration: locate near the major raw materials of locate near the the major customers. Locating near the raw materials will result in lower fixed costs and variable costs than locating near the market, but the owners believe ther 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 greater profit.. Annual Fixed costs Omaha $1.2 million, Kansas City $1.4 million Variable cost per unit Omaha $26, Kansas City $47 Expected annual demand Omaha 8000 units, Kansas City 12000 units.
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