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Peter Billington Stereo, Inc., supplies car radios to auto manufacturers and is going to open a new plant. The company

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Peter Billington Stereo, Inc., supplies car radios to auto manufacturers and is going to open a new plant. The company is undecided between Detroit and Dallas as the site. The fixed costs in Dallas are lower due to cheaper land costs, but the variable costs in Dallas are higher because shipping distances would increase.
Given the following costs;

Peter Billington Stereo, Inc., supplies car radios to auto manuf

(a) Perform an analysis of the volume over which each location is preferable.
(b) How does your answer change if Dallas€™s fixed costs increase by 10%?

Transcribed Image Text:

Fixed costs Variable costs Dallas $600,000 $28/radio Detroit $800,000 $22/radio

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Peter Billington Stereo a See the figure below b Q drops t…View the full answer


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Operations management

ISBN: 978-0132163927

10th edition

Authors: Jay Heizer, Barry Render

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Question Posted: July 23, 2013 01:39:01
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