Ang company that produces pleasure boats has decided to expand one of its lines.

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 4005 boats is location (Ex. type in as L1, L2, or L3)

Explanation / Answer

We solve the 3 equation in pairs to get the points of interaction as

1) 7958+3.1x= 5879+4.5x

x = 1485

2)7958+3.1x = 11897+2.2x

x = 4377

Hence, lowest cost for location 1 will be in range ( 1485,4377)

lowest cost for location 2 will be in range (0,1485)

lowest cost for location 3 will be in range (4377 and above)

4005 falls in (1485,4377) . hence location 1 is optimum

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---