Question: The next three questions (1-3) are based upon the following: Coffee Bloom Caf, Inc. is thinking on increasing their capacity due to the expanding market
The next three questions (1-3) are based upon the following: Coffee Bloom Caf, Inc. is thinking on increasing their capacity due to the expanding market demand. There are three options: Option 1: setting up a new caf in a different location A. The costs are estimated as $60,000 per year for fixed cost and $7 as unitary variable cost. This option would lead to the shutdown of the current caf. Option 2: setting up a new caf in a different location B with estimated fixed cost as $80,000 per year and $5 as unitary variable cost. This option would lead to the shutdown of the current caf. Option 3: increasing the current capacity in the same
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