Homework Problem 4 A firm that has recently experienced an enormous growth rate is seeking to lease a small plant in either Memphis, Biloxi, or Birmingham. Prepare an economic analysis of the three locations given the following information: Annual costs for building, equipment, and administration would be $1,400,000 for Memphis, $1,940,000 for Biloxi, and $1,100,000 for Birmingham. Labor and material are expected to be $10 per unit in Memphis, $6 per unit in Biloxi, and $20 per unit in Birmingham. The Memphis location would increase system transportation costs by $50,000 per year, the Biloxi location would increase them by $60,000 per year, and the Birmingham location would increase those costs by $25,000 per year. Expected annual volume is 60,000 units.

Homework Problem 5 A retired auto mechanic hopes to open his own rust- proofing shop. Customers would be area new car dealers. Two locations are being considered, one in the center of the city and one on the outskirts of the city. The in-city location would involve fixed monthly costs of $7,000 and labor,materials and transportation costs of $10 per car. The outside location would have fixed monthly costs of $4,800 and labor, materials, and transportation costs of $18 per car. Dealer price at either location will be $90 per car. a. Which location will yield the greatest profit if monthly demand is (1) 200 cars? (2) 300 cars? b. At what volume of output will the two sites yield the same monthly profit?

Operation Homework # 6 Solve the following transportation problem. From\To A B C D Supply 1 10 10 9 15 360 2 9 8 5 10 250 3 8 5 13 7 300 Demand 260 400 250 300 1210/910

36 Transportation Model From\To A B C D Supply 1 10 10 9 15 360 2 9 8 5 10 250 3 8 5 13 7 300 DUMMY 0 0 0 0 300 DEMAND 260 400 250 300 1210\1210 Note Supply=Demand Balanced Problem Final Cost = 6,350 Dummy D 300

Operations Homework # 7 From\To D E F G H Supply A 10 40 10.4 17 10.3 520 B 8.5 25 7.5 2.5 4 200 C 10.5 10 9 8.4 3.5 200 Demand 150 200 250 190 130 920\920 Note: Problem is Balanced

38 3 Possible Conditions Demand=Supply Balanced Demand>Supply Add a Dummy Row (Plant) Some Demand will be Un-Filled Demand