Illustrate what range of product would each plant be prefer

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Q. A soft drink maker needs to expand into a neighbouring country. y need product bottled in that country to avoid political issues and to enhance local image of product. y have identified 2 options for expansion. First is to build a highly automated process. Economies of scale would allow m to produce a can of soda for $0.04 and distribution costs would be $0.02 per can. This facility would cost $1 million per year in fixed costs. Second option would be to build a semi-automated plant that would cost $650,000 per year in fixed costs. Explain however, cost to produce a can would be $0.07 and distribution cost would be $0.04 per can. Over illustrate what range of product would each plant be preferred?

Reference no: EM1374758

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