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 compared to 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 $184 in either case. Annual fixed costs (3 millions) Variable cost per unit Expected annual demand (units) S 1.1 10,100 Kansas City F 1.0 $ 10,700 49 Cuck here for the Excel Data Eile Using the above information, determine which location would produce the greater profit.

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 compared to 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 $184 in either case. Annual fixed costs (3 millions) Variable cost per unit Expected annual demand (units) S 1.1 10,100 Kansas City F 1.0 $ 10,700 49 Cuck here for the Excel Data Eile Using the above information, determine which location would produce the greater profit.

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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