Audi Motors is considering three sitesA, B, and Cat which to locate a factory to build its
Question:
The firm knows it will produce between 0 and 60,000 SUV XL500s at the new plant each year, but, thus far, that is the extent of its knowledge about production plans.
(a) For what values of volume, V, of production, if any, is site C a recommended site?
(b) What volume indicates site A is optimal?
(c) Over what range of volume is site B optimal?Why?
Transcribed Image Text:
Annualized Fixed Cost $10,000,000 $20,000,000 $25,000,000 Variable Cost per Auto Produced Site $2,500 $2,000 $1,000
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a For all volumes above 10000 site C has the lowest cost b Site A is opt...View the full answer
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