Table 96
Nuts-And-Bolts Inc -Excel Products Is Planning a New Warehouse to Serve the 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.
$$\begin{array} { | c | c | c | } \hline \text { Area } & \text { Coordinates } & \text { Demand } \\\hline \mathrm { A } & ( 7,3 ) & 30 \\\mathrm {~B} & ( 7,7 ) & 40 \\\mathrm { C } & ( 1,10 ) & 45 \\\mathrm { D } & ( 2,6 ) & 15 \\\mathrm { E } & ( 4,5 ) & 25 \\\hline\end{array}$$
-Excel Products is planning a new warehouse to serve the Southeast.Locations A,B,and C are under consideration.Fixed and variable costs follow:
$$\begin{array} { | c | c | c | } \hline \text { Location } & \begin{array} { c } \text { Fixed Cost } \\\text { per Year }\end{array} & \begin{array} { c } \text { Variable Cost } \\\text { per Unit }\end{array} \\\hline \text { A } & \$ 2,500,000 & \$ 19 \\\text { B } & 1,500,000 & 7 \\\text { C } & 2,000,000 & 9 \\\hline\end{array}$$
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 as necessary to calculate exactly the break-even quantity that defines each range.

Which of the following statements is correct?

A) Location A is the best one if volumes are quite high.
B) Location B is best over all volume levels.
C) The total cost of location A, if the volume is 250,000 units, is over $7,000,000.
D) The break-even quantity between A and B is more than 75,000 units but less than 200,000 units.