Question: An operations manager must decide between two location alternatives, A and B. A would have annual fixed costs of $80,000, transportation costs of $80 per

An operations manager must decide between two

An operations manager must decide between two location alternatives, A and B. A would have annual fixed costs of $80,000, transportation costs of $80 per unit, and labour and material costs of $70 per unit. B would have annual fixed costs of $150,000, transportation costs of $20 per unit, and labour and material costs of $80 per unit. Revenue will be $250 per unit. a) Which alternative would yield the higher profit for an annual demand of 2,000 units? b) At what volume (quantity) would the manager be indifferent in terms of which of the two locations were chosen? What would the profit be at that volume

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!