A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit
If annual demand is expected to be 10 million units, which plant offers the lowest total cost?
A) Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.
B) Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units.
C) Plant A, because it is cheaper than Plant B for all volumes.
D) Plant B, because it has the lower variable cost per unit.
E) Neither Plant A nor Plant B, because the crossover point is at 10 million units.
A
You might also like to view...
A project has the activity duration and cost information indicated in the table where all times are in weeks. There is a penalty of $250 per week for every week the project extends beyond 32 weeks
What is the duration of the least expensive project possible? Activity Normal time Crash time Normal Cost Crash Cost Predecessor A 8 5 $1,000 2,000 B 6 4 1,500 2,000 A C 8 5 1,800 2,300 A D 12 9 1,000 1,800 B E 14 11 950 1,450 B F 9 7 1,500 1,900 C, D G 7 5 2,300 2,800 E, F A) 38 weeks B) 37 weeks C) 36 weeks D) 35 weeks
An assignment problem is a special form of transportation problem where all supply and demand values equal 0
Indicate whether this statement is true or false.