Table 13.8 an Operations Manager Has Narrowed Down the Search for a for a New

question 107

Multiple Choice

Table 13.8
An operations manager has narrowed down the search for a new plant for Tim! to three locations. Fixed and variable costs follow.

-An operations manager has narrowed down the search for a new plant for McIntosh Enterprises to three locations. Fixed and variable costs follow:
Plot the total cost curves in the chart provided 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.

Which of the following statements is correct?

• A) Location C is the best one if volumes are quite low.
• B) Location A becomes the most expensive place to produce at volumes less than 10,000.
• C) The break-even quantity between A and B is less than or equal to 17,000 units.
• D) The break-even quantity between C and B is more than 30,000 units.

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Definitions:

Probability Interval

A range within which a particular probability event is expected to lie, giving a certain level of confidence.

Forecast Chart

A graphical representation that predicts future values based on historical data trends and patterns.

Random Variates

Randomly generated values that follow a specified distribution.

Assumption Cells

Cells in a spreadsheet model where key input values are entered, which are based on assumptions that affect the model's outcomes.