Table 96
Nuts-And-Bolts Inc -The Operations Manager Has Narrowed Down the Search for a for a Plant

Multiple Choice

Table 9.6
Nuts-and-Bolts Inc. wishes to find the best location for a plant
that will satisfy customer demand in the following five areas.
$$\begin{array} { | c | c | c | } \hline \text { Area } & \text { Coordinates } & \text { Demand } \\\hline \mathrm { A } & ( 7,3 ) & 30 \\\mathrm {~B} & ( 7,7 ) & 40 \\\mathrm { C } & ( 1,10 ) & 45 \\\mathrm { D } & ( 2,6 ) & 15 \\\mathrm { E } & ( 4,5 ) & 25 \\\hline\end{array}$$
-The operations manager has narrowed down the search for a new plant to three locations.Fixed and variable costs follow:
$$\begin{array} { | c | c | c | } \hline \text { Location } & \begin{array} { c } \text { Fixed Cost } \\\text { per Year }\end{array} & \begin{array} { c } \text { Variable Cost } \\\text { per Unit }\end{array} \\\hline \mathrm { A } & \$ 75,000 & \$ 31 \\\mathrm {~B} & 250,000 & 12 \\\mathrm { C } & 300,000 & 15 \\\hline\end{array}$$
Plot the total cost curves in the chart provided below,and identify the range over which each location would be best.Then use break-even analysis to calculate exactly the break-even quantity that defines each range.

Which of the following statements is correct?

A) Location C is the best one if volumes are quite low.
B) The break-even quantity between B and C is less than or equal to 6000 units.
C) The break-even quantity between A and B is less than or equal to 9170 units.
D) The break-even quantity between A and B is more than 9170 units but less than 9270 units.