Post by: Awilson837 on Dec 3, 2019
Question 1
A manufacturing company is considering two alternative locations for a new facility. The fixed and variable costs for the two locations are found in the table below. For which volume of business would the two locations be equally attractive? If the company plans on producing 50,000 units, which location would be more attractive?| | Glen Rose | Mesquite |
| Fixed Costs | $1,000,000 | $1,500,000 |
| Variable Costs ($ per unit) | 25 | 23 |
Question 2
East Texas Seasonings is preparing to build one processing centre to serve its four sources of seasonings. The four source locations are at coordinates shown below. Also, the volume from each source is provided.a. Calculate the volume-weighted centre of gravity.
b. Calculate the simple centre of gravity (all cities weighted equally).
c. Explain why the two calculations differ.
| | X-coordinate | Y-coordinate | Volume |
| Athens, Texas | 30 | 40 | 100 |
| Beaumont, Texas | 20 | 15 | 400 |
| Carthage, Texas | 55 | 60 | 150 |
| Denton, Texas | 20 | 70 | 250 |
Post by: sylvia on Dec 3, 2019
Answer 1
Crossover is at 250,000 units. Below the crossover, Glen Rose must be cheaper as it has the lower fixed cost. Thus, for an estimated unit volume of 50,000, Glen Rose should be chosen.
Answer 2
The weighted centre of gravity is located at X = 24,250 / 900 = 26.9, Y = 36,500 / 900 = 40.6. The simple centre of gravity is located at X = 125 / 4 = 31.25. Y = 185 / 4 = 46.25. The simple centre is more to the east and north than the weighted centre of gravity. A partial explanation is that the heaviest tonnage is from Beaumont, which is far to the west and south. Its influence pulls the weighted centre toward the west and south.
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