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Annual production costs for plants of different sizes

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Reference no: EM132484558

Given the following information: Your operations group has calculated annual production costs for plants of different sizes. 

  • A facility designed to produce 120,000 units of your product per year will operate with a total annual production cost of $54 million
  • A facility designed to produce 150,000 units per year will operate with a total annual production cost of $60 million.
  • A facility designed to produce 200,000 units per year will operate with a total annual production cost of $84 million.

Is this statement true or false? The minimum efficient scale (MES) of a facility for producing your product is probably larger than 200,000 units per year.

Reference no: EM132484558

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