An operations manager has narrowed down the search for a new king kola plan to three locations.
Question:
An operations manager has narrowed down the search for a new king kola plan to three locations. Fixed and variable costs follow:
A - Fixed Cost $100,000 and variable cost $10
B - Fixed Cost $150,000 and variable cost $7
C - Fixed Cost $200,000 and variable cost $5
Identify the range over which each location would be best. Then use break-even analysis to calculate exactly the break-even quantity that defines each range.
Which of the following statements is correct?
A. Location C is the best one if volumes are less than $5000
B. Location A becomes the most expensive place to produce at volumes less than $10,000
C. The break-even quantity between A and B is less than or equal to 17,000 units
D. The break-even quantity between C and B is more than 30,000 units
Operations Management Processes And Supply Chains
ISBN: 9781292409863
13th Global Edition
Authors: Lee Krajewski, Naresh Malhotra, Larry Ritzman