A valve manufacturer is considering three alternative locations for a new plant for manufacturing ball valves for oil and gas industry. Since the plant ships nationwide, revenue is assumed the same regardless of plant location. The estimated annual fixed and variable costs for each site is shown in TABLE Location Costs A B C Fixed (RM) 700,000 1,000,000 $1,500,000 Variable (RM) $28 $18 $12 Identify the range of output for which each location provides the lowest total cost. Show necessary graph and calculation used in the analysis. Discuss on the finding(s).
A valve manufacturer is considering three alternative locations for a new plant for manufacturing ball valves for oil and gas industry. Since the plant ships nationwide, revenue is assumed the same regardless of plant location. The estimated annual fixed and variable costs for each site is shown in TABLE Location Costs A B C Fixed (RM) 700,000 1,000,000 $1,500,000 Variable (RM) $28 $18 $12 Identify the range of output for which each location provides the lowest total cost. Show necessary graph and calculation used in the analysis. Discuss on the finding(s).
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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A valve manufacturer is considering three alternative locations for a new plant for manufacturing ball valves for oil and gas industry. Since the plant ships nationwide, revenue is assumed the same regardless of plant location. The estimated annual fixed and variable costs for each site is shown in TABLE
|
|
Location |
||
|
Costs |
A |
B |
C |
|
Fixed (RM) |
700,000 |
1,000,000 |
$1,500,000 |
|
Variable (RM) |
$28 |
$18 |
$12 |
Identify the range of output for which each location provides the lowest total cost. Show necessary graph and calculation used in the analysis. Discuss on the finding(s).
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