The way to minimize the total cost incurred during the period of the next 4 quarters. Linear programming: It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.

Question

Hyundai Motors is considering three sites-A, B, and C-at which to locate a factory to build its new electric car batteries. The goal is to locate at a minimum-cost site, where cost is measured by the annual fixed plus variable costs of production. Hyundai Motors has gathered the following data: Site Annualized Fixed Cost Variable Cost per Battery Produced A $11,000,000 $2,600 B C $2,000 $1,100 $20,000,000 $25,000,000 The firm knows it will produce between 0 and 60,000 batteries at the new plant each year, but, thus far, that is the extent of its knowledge about production plans. a) The value of volume, V, of production above which site C is recommended = batteries (round your response up to the next whole number).

Answer 1

Question

Chapter 4, Problem 87P

a)

Summary Introduction

To determine: The way to minimize the total cost incurred during the period of the next 4 quarters.

Linear programming:

It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.

b)

Summary Introduction

To use: The solver table to identify the increase of total cost due to the increase of required capacity at the end of quarter 4.

Linear programming:

It is a mathematical modeling procedure where a linear function is maximized or minimized subject to certain constraints. This method is widely useful in making a quantitative analysis which is essential for making important business decisions.

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