MKT $4040$ Homework #$4$

Two alternative locations are under consideration for a new plant: Jackson, Mississippi, and

Dayton, Ohio. The Jackson location is superior in terms of costs. However, management

believes that sales volume would decline if this location were chosen because it is farther

from the market, and the firm's customers prefer local suppliers. The selling price of the

product is $$250$ per unit in either case. Use the following information to determine which

location yields the higher total profit per year:

Dennison Manufacturing makes large helical springs used in aircraft landing gear. The

company has narrowed its potential choices for its new manufacturing facility to four cities.

The following information is known about the manufacturing and shipping costs of locating

in each of these four cities:

a$.$ Use break$-$even analysis to determine where Dennison should locate. Show all your

work.

b$.$ What are the assumptions of breakeven analysis?

c$.$ Based solely on the break$-$even quantity, if Dennison's manufacturing forecast for the

foreseeable future is $40,000$ units annually, where should he locate?

d$.$ How would you report this to management?