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A newly formed firm must decide on a plant locatlon. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will esult in lower fixed and varlable costs compared to locating near the market, but the owners belleve there would be a loss in sales volume because customers tend to favor local supplers. Revenue per unit will be $190 in elther case. Omaha Kansas City Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) 1.1 $ 1.e $ 40 $ 55 18,400 11,e0e Click here for the Excel Data File Using the above Information, determine which locatlon would produce the greater profit. would produce the greater gross profit of

A newly formed firm must decide on a plant locatlon. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will esult in lower fixed and varlable costs compared to locating near the market, but the owners belleve there would be a loss in sales volume because customers tend to favor local supplers. Revenue per unit will be $190 in elther case. Omaha Kansas City Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) 1.1 $ 1.e $ 40 $ 55 18,400 11,e0e Click here for the Excel Data File Using the above Information, determine which locatlon would produce the greater profit. would produce the greater gross profit of

Practical Management Science
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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Problem 8-1 (Algo) A newly formed firm must decide on a plant locatlon. 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 varlable costs compared to locating near the market, but the owners belleve there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $190 In elther case. Omaha Kansas City Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) 1.1 1.e $ 40 $ 55 11,000 10,400 Click here for the Excel Data Fle Using the above Information, determine which location would produce the greater profit. would produce the greater gross profit of
Transcribed Image Text:Problem 8-1 (Algo) A newly formed firm must decide on a plant locatlon. 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 varlable costs compared to locating near the market, but the owners belleve there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $190 In elther case. Omaha Kansas City Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) 1.1 1.e $ 40 $ 55 11,000 10,400 Click here for the Excel Data Fle Using the above Information, determine which location would produce the greater profit. would produce the greater gross profit of
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