Ang company that produces pleasure boats has decided to expand one of its lines.
ID: 3217454 • Letter: A
Question
Ang company that produces pleasure boats has decided to expand one of its lines. The company is considering three Location alternatives. The cost structure for each location is given as shown in the table. a) The range of output for location alternative 1 that would yield the lowest total cost is (Ex. In whole number, use Q, = to specify the range) b) The range of output for location alternative 2 that would yield the lowest total cost is (Ex. In whole number, use Q, = to specify the range) c) The range of output for location alternative 3 that would yield the lowest total cost is (Ex. In whole number, use Q, = to specify the range) d) The alternative would yield the lowest total cost for an expected annual volume of 6505 boats is location (Ex type in as L1, L2, or L3)Explanation / Answer
The equation for L1 is
= 13500+2.4x
The equation for L2 is
= 8500+3.3x
The equation for L3 is
= 6500+4.2x
L1=L2
13500+2.4x =8500+3.3x
5000=0.9x
x=5555.55
Between L2 and L3 ,
8500+3.3X =6500+4.2X
2000=0.9X
X= 2222.22
Between L3 &L1
X =3888.88
a)
0<=x<=2222.22
b)
2222.22<=x<=3888.88
c)
3888.88<=x<=5555.55
Intially we follow L3 up 2222.22, then we follow graph for low value upto 3888.88 and finally L1
d)
This 6505 expected annual income comes before intersection of L2 & L3 hence
after 6500, L3 is ths option...
Hence answer is L3