You have $3000 to enclose a rectangular piece of property with a fence. The fence costs $9 per foot. A…
You have $3000 to enclose a rectangular piece of property with a fence. The fence costs $9 per foot. A scale drawing of the property has a length of 8 inches and a width of 7 inches. The scale is 1 in. : 12 ft. How much will it cost to enclose the property with the fence? Do you have enough money?
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Evaluate 7.2 Problem 4
Fall-Line, Inc., is a Great Falls, Montana, manufacturer of a variety of downhill skis. Fall-Line is considering four locations for a new plant: Aspen, Colorado; Medicine Lodge, Kansas; Broken Bow, Nebraska; and Wounded Knee, South Dakota. Annual fixed costs and variable costs per pair of skis are shown in the attached table. a. Plot the total cost curves for all of the communities on a single graph. Identify on the graph the range in volume over which each location would be best. b. What break-even quantity defines each range? Although Aspen’s fixed and variable costs are dominated by those of the other communities, Fall-Line believes that both the demand and the price would be higher for skis made in Aspen than for skis made in the other locations. The attached table also shows those projections. c. Determine which location yields the highest total profit per year. d. Is this location decision sensitive to forecast accuracy? At what minimum sales volume does Aspen become the location of choice?
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Evaluate 7.2 Problem 3
Two alternative locations are under consideration for a new plant: Jackson, Mississippi and Dayton, Ohio. The Jackson location is superior in terms of costs. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm’s customers prefer local supplies. The selling price of the product is $250 per unit in either case. Use the information in the table attached to determine which location yields the higher total profit per year.
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