# PROBLEMS 1. The Soft Toys Company has collected information on fixed and variable costs for four potential plant locations.

Kindly review two problems questions attached.  PROBLEMS

1.

The Soft Toys Company has collected information on fixed and variable costs for four potential plant locations.

LOCATION

ANNUAL FIXED COST (\$)

UNIT VARIABLE COST (\$)

A

200,000

50

B

300,000

45

C

400,000

25

D

600,000

20

• a.Plot the total cost curves for the four plant locations on a single graph.
• b.Find the break-even points and determine the range of demand for which each location has a cost advantage.
• c.Which plant location is best if demand is 30,000 units?

2.

The Bruhaha Brewery is planning to expand internationally. The company has identified five critical location factors and their relative weights. The scores for each of the three potential sites are shown in the following table. Which site should be selected?

CRITICAL LOCATION FACTORS

FACTOR WEIGHT (SUM TO 1)

COLUMBUS SCORES (1–100)

LAS VEGAS SCORES (1–100)

SPOKANE SCORES (1–100)

Labor cost

0.15

70

90

50

Proximity to market

0.25

100

90

80

Supplier base

0.20

80

100

70

Quality of life

0.30

90

60

60

Taxes

0.10

60

80

90