Bahouth Ltd. is planning for the next two years of production and debating whether to construct...

  

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Bahouth Ltd. is planning for the next two years of production and debating whether to construct a large cross-dock facility with 40 truck bays or a smaller one with 20 truck bays. The cost to build the large facility is $2 million and the cost to build the small one is $1.2 million. If they construct a large facility and demand is as high as they hope, then operating costs are $450,000 annually. If they construct a large facility and demand is low, then operating costs are $300,000. If they construct a small facility and demand is low, the operating costs are $275,000 but if they experience high demand, the operating cost of a small facility increases to $600,000. After having conducted some market research, they feel that the likelihood of high demand is 0.7 and the likelihood of small demand is 0.3. (Note that there is no return rate, meaning return rate is 0%) Use the information from Case Study 1 to determine the expected cost of operating a large facility for two years. (Hint: do not include the building cost as the question is only about operating cost. In other words, there is no cost at period 0 and you should only calculate the operating costs in periods 1 and 2 and bring them to period 0.) O $810,000 O $405,000 O $2,810,000 O $450,000 Use the information from Case Study 1 to determine the expected cost of operating a small facility for a period of two years. (Hint: do not include the building cost as the question is only about operating cost. In other words, there is no cost at period 0 and you should only calculate the operating costs in periods 1 and 2 and bring them to period 0.) O $502,000 O $1,102,000 O $1,005,000 O $2,205,000 Use the information from Case Study 1 to determine the cost of the best alternative for a two year period. (Hint: you need to include the building costs in this question. In other words, add the building costs to the answers of questions 1 and 2 and pick the best one.) O $2,810,000 O $2,205,000 O $1,200,000 9 pts O $2,000,000 Bahouth Ltd. is planning for the next two years of production and debating whether to construct a large cross-dock facility with 40 truck bays or a smaller one with 20 truck bays. The cost to build the large facility is $2 million and the cost to build the small one is $1.2 million. If they construct a large facility and demand is as high as they hope, then operating costs are $450,000 annually. If they construct a large facility and demand is low, then operating costs are $300,000. If they construct a small facility and demand is low, the operating costs are $275,000 but if they experience high demand, the operating cost of a small facility increases to $600,000. After having conducted some market research, they feel that the likelihood of high demand is 0.7 and the likelihood of small demand is 0.3. (Note that there is no return rate, meaning return rate is 0%) Use the information from Case Study 1 to determine the expected cost of operating a large facility for two years. (Hint: do not include the building cost as the question is only about operating cost. In other words, there is no cost at period 0 and you should only calculate the operating costs in periods 1 and 2 and bring them to period 0.) O $810,000 O $405,000 O $2,810,000 O $450,000 Use the information from Case Study 1 to determine the expected cost of operating a small facility for a period of two years. (Hint: do not include the building cost as the question is only about operating cost. In other words, there is no cost at period 0 and you should only calculate the operating costs in periods 1 and 2 and bring them to period 0.) O $502,000 O $1,102,000 O $1,005,000 O $2,205,000 Use the information from Case Study 1 to determine the cost of the best alternative for a two year period. (Hint: you need to include the building costs in this question. In other words, add the building costs to the answers of questions 1 and 2 and pick the best one.) O $2,810,000 O $2,205,000 O $1,200,000 9 pts O $2,000,000

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