Solved

The Operations Manager Has Narrowed Down the Search for a New

question 163

Essay

The operations manager has narrowed down the search for a new plant to three locations. Fixed and variable costs follow: $\begin{array} { | l | l | l | } \hline \text { Location } & \text { Fixed Costs } & \text { Variable Costs } \\& \text { Per Year } & \text { Per Unit } \\\hline \text { A } & 70,000 & 25 \\\text { B } & 120,000 & 22 \\\text { C } & 250,000 & 17 \\\hline\end{array}$ Plot the total cost curves in the chart provided below, and identify the range over which each location would be best. Then use break- even analysis to calculate exactly the break- even quantity that defines each range. $73$ $The operations manager has narrowed down the search for a new plant to three locations. Fixed and variable costs follow: \begin{array} { | l | l | l | } \hline \text { Location } & \text { Fixed Costs } & \text { Variable Costs } \\ & \text { Per Year } & \text { Per Unit } \\ \hline \text { A } & 70,000 & 25 \\ \text { B } & 120,000 & 22 \\ \text { C } & 250,000 & 17 \\ \hline \end{array} Plot the total cost curves in the chart provided below, and identify the range over which each location would be best. Then use break- even analysis to calculate exactly the break- even quantity that defines each range. 73 a. What is the break- even quantity between A and B? b. What is the break- even quantity between B and C?$ a. What is the break- even quantity between A and B?
b. What is the break- even quantity between B and C?

Definitions:

Ground

The solid surface of the Earth, where various geological and biological processes occur.

Drumlins

streamlined, elongated hills formed by glacial action, made of till and shaped like inverted spoons.

Sediment

Particles of rock, minerals, or biological materials that have been transported and deposited by wind, water, or ice, often forming layers in bodies of water.

Glacier

A large mass of ice, formed from compacted layers of snow, that moves slowly over land.