Author Question: A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per ... (Read 119 times)

PhilipSeeMore · **on:** Dec 3, 2019

Question 1

A full-service restaurant is considering opening a new facility in a specific city. The table below shows its ratings of four factors at each of two potential sites.

Factor	Weight	Gary Mall	Belt Line
Affluence of local population	.20	30	30
Traffic flow	.40	50	20
Parking availability	.20	30	40
Growth potential	.20	10	30

The score for Gary Mall is ________ and the score for Belt Line is ________.
◦ 34; 28
◦ 20; 24
◦ 120; 120
◦ 18; 120
◦ 22; 24

Question 2

A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost?
◦ Plant A, because it is cheaper than Plant B for all volumes.
◦ Neither Plant A nor Plant B, because the crossover point is at 10 million units.
◦ Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.
◦ Plant B, because it has the lower variable cost per unit.
◦ Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units.

cloud · **Reply #1 on:** Dec 3, 2019

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