Question: Xun Company located at Dayton, Ohio, is looking at building up factories either at Cincinnati, Columbus, or Cleveland. They have estimated the following parameters for each location. For what demand range should Xun choose factory locations?
|
Location
|
Fixed Cost
|
Variable
Cost
|
|
Cincinnati
|
300,000
|
6
|
|
Columbus
|
600,000
|
4
|
|
Cleveland
|
100,000
|
8
|
Step 1: calculate indifference points
Step 2: draw the total cost line for each location
Step 3: identify the demand range for each location