In a plant location study, there are two points to be chosen: location A and B. These locations are linked by a road and are 150 km from each other. The raw material for the industry exists only at location A. The freight of the raw material from A to B costs $ 1.00 per quintal per kilometer traveled. The market for the finished products exists only in B. Due to the volume and fragility, the freight of the finished products between A and B costs $1.20 per quintal.

In the process, 10 quintals of raw material produce 5 quintals of finished product. Where should the plant be located?

Answer rating: 100% (QA)

To determine the optimal location for the plant considering the transportation costs of raw materials and finished products we need to analyze the total costs involved in production at each location Raw Material Transportation Cost From location A to B 100 per quintal per kilometer Since raw material ... View the full answer