Reference no: EM132838049
Question - A manufacturing firm is planning to open a new factory. There are four countries under consideration: USA, Canada, Mexico, and Panama. The table below lists the fixed costs and variable costs for each site. The product is mainly sold in the U.S. for $495 per unit.
|
Location
|
Fixed Cost
|
Variable cost
|
|
Canada
|
$5,000,000
|
$210
|
|
Mexico
|
$1,500,000
|
$250
|
|
USA
|
$3,000,000
|
$230
|
|
Panama
|
$500,000
|
$300
|
Required -
a- Using cross-over analysis, find the range of production that makes each location optimal with lowest total cost.
b- Using Excel, construct total production cost linear graph for all 4 locations and verify cross-over points obtained in part (a). In your graph, use quantity values from 0 to 250,000 at increment of 10,000.
c- If the company forecasts that market demand will be around 150,000 per year, which country is the best choice and what is the yearly profit?
d- Construct Total cost, Total revenue, and Total profit graphs for the optimal location in part (C).