Hansen Controls Has Been Awarded a Contract for a Large

question 50

Essay

Hansen Controls has been awarded a contract for a large number of control panels. To meet this demand, it will use its existing plants in San Diego and Houston, and consider new plants in Tulsa, St. Louis, and Portland. Finished control panels are to be shipped to Seattle, Denver, and Kansas City. Pertinent information is given in the table.
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Develop a model whose solution would reveal which plants to build and the optimal shipping schedule.

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Definitions:

Projected Fixed Costs

Estimated costs that do not vary with the volume of output or sales, typically including expenses like rent, salaries, and insurance.

Contribution Margin

The difference between sales revenue and variable costs, illustrating how much revenue contributes towards covering fixed costs and generating profit.

Accounting Break-Even

Represents the sales amount at which a business covers its operating costs without making a profit or a loss.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.