Production and Operations Analysis, Seventh Edition
Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 4, Problem 34AP

a

Summary Introduction

Interpretation: The average annual costs of production, holding, and setup at each location is to be determined along with preferable location.

Concept introduction: The cost of producing abroad and locally may differ, and the less costly option would be more appropriate for B computer to choose as it would maximize its profits more than a high cost location.

Total cost refers to the addition of fixed and variable cost.

b

Summary Introduction

Interpretation:The value of the pipeline inventory in each case, and whether the comparison of the pipeline inventories alters the conclusion reached in part (a).

Concept introduction:The value of inventory would depend on the number of units produced the cost incurred in producing those units.

Total cost refers to the addition of fixed and variable cost.

c

Summary Introduction

Interpretation:Whether considerations other than cost favor local over overseas production are to be determined.

Concept introduction: Cost is not the only contributing factor when making the choice of where the production should take place, there are several other quantitative and qualitative factors.

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