Concept explainers
a)
To determine: The monthly volume at each location.
Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.
a)
Answer to Problem 2P
Explanation of Solution
Given Information:
It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000
Calculate the monthly volume at each location
It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.
Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.
b)
To determine: The location that yield with greatest profits.
Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.
b)
Answer to Problem 2P
Explanation of Solution
Given Information:
It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.
Calculate the location that yield with greatest profits.
It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.
Hence, location C yields greatest profits.
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Chapter 8 Solutions
Operations Management
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