A Manufacturing Company Is Considering Two Alternative Locations for a New

question 49

Short Answer

A manufacturing company is considering two alternative locations for a new facility. The fixed and variable costs for the two locations are presented in the following table. For which volume of business would the two locations be equally attractive? If the company plans on producing 100,000 units, which location would be more attractive?
$$\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Grand } \\\text { Rapid } \\s\end{array} & \text { Ann Arbor } \\\hline \text { Fixed costs } & \$ 2,000,000 & \$ 2,500,000 \\\hline \text { Variable costs (\$ per unit) } & 30 & 25 \\\hline\end{array}$$

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Definitions:

Cross-Functional Team

A group composed of members from different departments or areas of expertise working together towards a common goal.

Hierarchical Organization

An organizational structure where entities are ranked according to levels of authority or status.

Tensions

involves a state of mental or emotional strain typically resulting from challenging or demanding circumstances.

Team Performance

The effectiveness and efficiency with which a group accomplishes its collective goals, measured by various metrics.