Wiebe Trucking, Inc., is planning a new warehouse to serve the western United States. Denver, Santa Fe, and Salt Lake City are under consideration. For each location, annual fixed costs (rent, equipment, and insurance) and average variable costs per shipment (labor, transportation, and utilities) are listed in the following table. Sales projections range from 500,000 to 600,000 shipments per year. Location Denver Santa Fe Salt Lake City Annual Fixed Costs $4,800,000 $4,500,000 $3,200,000 Variable Costs per Shipment $4.55 $6.20 $7.50 a. Plot the total cost curves for all the locations on a single graph. b. Which city provides the lowest overall costs?

Wiebe Trucking, Inc., is planning a new warehouse to serve the western United States. Denver, Santa Fe, and Salt Lake City are under consideration. For each location, annual fixed costs (rent, equipment, and insurance) and average variable costs per shipment (labor, transportation, and utilities) are listed in the following table. Sales projections range from 500,000 to 600,000 shipments per year. Location Denver Santa Fe Salt Lake City Annual Fixed Costs $4,800,000 $4,500,000 $3,200,000 Variable Costs per Shipment $4.55 $6.20 $7.50 a. Plot the total cost curves for all the locations on a single graph. b. Which city provides the lowest overall costs?

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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Question

Please explain the full calculations

10. Wiebe Trucking, Inc., is planning a new warehouse to serve
the western United States. Denver, Santa Fe, and Salt Lake
City are under consideration. For each location, annual fixed
costs (rent, equipment, and insurance) and average variable
costs per shipment (labor, transportation, and utilities) are
listed in the following table. Sales projections range from
500,000 to 600,000 shipments per year.
Location
Denver
Santa Fe
Salt Lake City
Annual Fixed
Costs
$4,800,000
$4,500,000
$3,200,000
Variable Costs
per Shipment
$4.55
$6.20
$7.50
a. Plot the total cost curves for all the locations on a single
graph.
b. Which city provides the lowest overall costs?

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