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
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter6: Optimization Models With Integer Variables
Section: Chapter Questions
Problem 100P
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Question
- 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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