Production capacity in manufacturing ignition coils

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Reference no: EM131003112

An owner looking to expand his production capacity in manufacturing ignition coils for automobiles. He is considering locations A, B, and C for the construction of the new plant. The owner desires the most economical location for a volume of 5000 units per year. The owner calculates the fixed costs per year at each of the sites amount to $35,000, $60,000, and $120,000, respectively. The variable cost is $120 per unit, $100 per unit, and $60 per unit respectively. The expected selling price for each spark plug is $150.

a) Find the best volume for each location.

b) For the 5000 units, which location is most suitable?

Reference no: EM131003112

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