An operations manager has narrowed down the search for a new plant to three locations. Fixed and variable costs follow:
Plot the total cost curves in the chart provided and identify the range over which each location would be best. Then use break-even analysis to calculate exactly the break-even quantity that defines each range.
Which of the following statements is correct?
◦ The break-even quantity between A and B is less than or equal to 1700 units.
◦ Location A becomes the most expensive place to produce at volumes less than 2000.
◦ The break-even quantity between C and B is more than 3000 units.
◦ Location C is the best one if volumes are quite low.
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