The distance between the resource (R) and the market (M) is 10 miles. A firm's procurement...
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The distance between the resource (R) and the market (M) is 10 miles. A firm's procurement cost is given by PC=2x2, where x is the distance from the resource measured in miles. The firm's distribution cost is given by DC=6*(10-x). Again, x is the distance from the resource. (a) What is the Total Freight Cost (TC) at each milestone. This question assumes there are only 11 possible discrete locations, i.e., x=0, 1, 2, 3, ...10. Locations between the milestones are not possible. Where should the firm locate? (You can do this "by hand" or in a spreadsheet) (b) Now assume, the firm can locate between the milestones, for instance at x=5.145. Provide a mathematically exact solution for the optimal location (with 3 decimals). What is the optimal x? At this location, what is PC, DC and TC (three decimals). (c) How does your answer to all parts under (b) change if the marginal procurement cost PC were equal to zero everywhere? The distance between the resource (R) and the market (M) is 10 miles. A firm's procurement cost is given by PC=2x2, where x is the distance from the resource measured in miles. The firm's distribution cost is given by DC=6*(10-x). Again, x is the distance from the resource. (a) What is the Total Freight Cost (TC) at each milestone. This question assumes there are only 11 possible discrete locations, i.e., x=0, 1, 2, 3, ...10. Locations between the milestones are not possible. Where should the firm locate? (You can do this "by hand" or in a spreadsheet) (b) Now assume, the firm can locate between the milestones, for instance at x=5.145. Provide a mathematically exact solution for the optimal location (with 3 decimals). What is the optimal x? At this location, what is PC, DC and TC (three decimals). (c) How does your answer to all parts under (b) change if the marginal procurement cost PC were equal to zero everywhere?
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a The total freight cost TC at each milestone is given by TC PC DC At x0 TC 202 6100 600 At ... View the full answer
Related Book For
Statistics for Business and Economics
ISBN: 978-0132930192
8th edition
Authors: Paul Newbold, William Carlson, Betty Thorne
Posted Date:
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