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Unformatted text preview: Location Planning and Analysis CHAPTER 8 LOCATION PLANNING AND ANALYSIS PROBLEMS P1. Two plant locations are under consideration for a new battery factory. Here are estimates of the fixed and variable costs at each location. Location Fixed Cost per Year Variable Cost per Unit A $1,500,000 $1.25 B 1,250,000 1.75 a. What is the total cost function for each location? b. Plot the total cost functions on the same graph. c. On the graph, identify the range of output for which each location has the least cost. d. Which location should be selected for an output of 400,000 batteries per year? 800,000 batteries per year? e. Find the cutoff point algebraically. P2. Four plant locations arc under consideration for a new microchip plant. Here are estimates of the fixed and variable costs at each location. Fixed cost Variable cost Locatio n per year per unit A $3,500,000 $600 B 3,000,000 800 C 4,000,000 500 D 4,500,000 400 a. What is the total cost function for each location? b. Plot the total cost functions for these locations on the same graph. c. On the graph, identify the range of output for which each location has the least cost. d. Which location should be selected for an output of 4,000 chips per year? 12,000 chips per year? e. Find the cutoff points algebraically. P3. Two locations are under consideration for building a condominium. (A condominium is a building in which each apartment is owned by the resident, rather than rented.) One location is in suburb A of a large Eastern city, and the other is in suburb B. The marketing manager has identified the following factors which bear upon the location decision and their relative weights....
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 Spring '08
 WILLIAMCOSGROVE

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