A Manufacturing Company Is Considering Three Expansion Options

Essay

A manufacturing company is considering three expansion options. The first is to do nothing (Option
A). The next is to leave the current plant open and also open a new larger plant (Option
B). Finally they could close the existing plant and open the new, larger one (Option
C). Given the VC and FC from the table below calculate the range for which each option minimizes cost.
$$\begin{array} { | l | l | l | } \hline \text { Option } & \text { FC } ( \$ ) & \text { VC (\$/unit) } \\\hline \mathrm { A } & 50000 & 2 \\\hline \mathrm { B } & 100000 & 1 \\\hline \mathrm { C } & 60000 & 1.4 \\\hline\end{array}$$