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Demonstrate to the OM manager using graph how to go about choosing the best location using the numerical example designed above

Demonstrate to the OM manager using graph how to go about choosing the best location using the numerical example designed above

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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Dobb's Ltd Wants to choose the best location for its new aluminum plant. The manager of
productions and operations has three possible locations to choose from. His assistant
recommends that he use break-even analysis location technique to help determine which
location is best based on costs.

Assuming:

Total fixed cost = 80,000

Price per unit= 20

AVC (Average variable cost) = 40

Break-even point= Total fixed cost / (AVC-Price per unit)

Break-even point = 80,000/ (40-20)

Break-even point = 4,000

1) Demonstrate to the OM manager using graph how to go about choosing the best location using the
numerical example designed above.

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