5. Company Z wants to find a new place for a distribution center. They recently had some researchand feasibility studies around the city and came up with four candidate locations. They were ableto collect all the relevant costs of this investment under two main categories: fixed costs andvariable costs. Based on the analysis the list of each cost type for all candidate locations are asfollows:FixedVariableCostCost125000Alternative A27Alternative B175000 30Alternative Ċ150000 20Alternative D 200000 13a. Using the above table please approximate total cost of each investment candidate with alinear equation and write them for all four them.b. Please plot all of the equations you listed above on a two dimensional graph consideringmaximum yearly operation quantity/volume can be maximum 10000 units. (Hint: use totalcost as y axis and the yearly operating quantity/volume as the x axis)c. Indicate which one(s) are the preferable option in terms of cost based on the total cost plotyou have provided above.d. Calculate the exact quantities that change preferred alternative on the graph (i.e. theintersection points of the lines which belong to least cost alternatives)

A) Let the annual operation volume =x Linear equation for the total cost of alternative A (y): Y\…

Answered: 5. Company Z wants to find a new place…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager ofproductions and operations has three possible locations to choose from. His assistantrecommends that he use break-even analysis location technique to help determine whichlocation is best based on costs. Assuming: Total fixed cost = 80,000 Price per unit= 20 AVC (Average variable cost) = 40 Break-even point= Total fixed cost / (AVC-Price per unit) Break-even point = 80,000/ (40-20) Break-even point = 4,000 1) Demonstrate to the OM manager how to go about choosing the best location using thenumerical example designed above.
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