PROBLEMS 1. The Soft Toys Company has collected information on fixed and variable costs for four potential plant locations.
Kindly review two problems questions attached. PROBLEMS
1.
The Soft Toys Company has collected information on fixed and variable costs for four potential plant locations.
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LOCATION
ANNUAL FIXED COST ($)
UNIT VARIABLE COST ($)
A
200,000
50
B
300,000
45
C
400,000
25
D
600,000
20
- a.Plot the total cost curves for the four plant locations on a single graph.
- b.Find the break-even points and determine the range of demand for which each location has a cost advantage.
- c.Which plant location is best if demand is 30,000 units?
2.
The Bruhaha Brewery is planning to expand internationally. The company has identified five critical location factors and their relative weights. The scores for each of the three potential sites are shown in the following table. Which site should be selected?
CRITICAL LOCATION FACTORS
FACTOR WEIGHT (SUM TO 1)
COLUMBUS SCORES (1–100)
LAS VEGAS SCORES (1–100)
SPOKANE SCORES (1–100)
Labor cost
0.15
70
90
50
Proximity to market
0.25
100
90
80
Supplier base
0.20
80
100
70
Quality of life
0.30
90
60
60
Taxes
0.10
60
80
90
