Assignment:
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Choosing a location for a plant
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Location
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Fixed Cost
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Variable Cost
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Waco, Texas
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$300,000
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$5.75
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Tijuana, Mexico
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$800,000
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$2.75
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Fayetteville, Arkansas
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$100,000
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$8.00
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Balfour's is considering building a plant in one of three possible locations. They have estimated parameters for each location (see table). You should use your POM for Windows software for problem solutions.
1. What is this type of analysis called?
2. For what unit sales volume should they choose each location?
3. Are there any points that are "ties" (ie, where you are indifferent between plant alternatives)? If so, what are they?
4. What are the advantages and limitations of this type of analysis? Explain.