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An operations manager has narrowed down the search for a new factory to three locations. The fixed and variable costs associated with each location are given in Table 3 below. Table 3 Location          Fixed Cost      Variable Cost A                     $100,000                    $10 B                      $150,000                      $7 C                     $200,000                      $5 1. Calculate the point where the costs lines intersect. 2. Over which volume of output is each location preferred based on costs?

An operations manager has narrowed down the search for a new factory to three locations. The fixed and variable costs associated with each location are given in Table 3 below. Table 3 Location          Fixed Cost      Variable Cost A                     $100,000                    $10 B                      $150,000                      $7 C                     $200,000                      $5 1. Calculate the point where the costs lines intersect. 2. Over which volume of output is each location preferred based on costs?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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  1. An operations manager has narrowed down the search for a new factory to three

locations. The fixed and variable costs associated with each location are given in Table 3

below.

Table 3

Location          Fixed Cost      Variable Cost

A                     $100,000                    $10

B                      $150,000                      $7

C                     $200,000                      $5

1. Calculate the point where the costs lines intersect.

2. Over which volume of output is each location preferred based on costs? 

 

 

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