QUESTION

(1) You are the operations manager and in this capacity, you have been asked to provide a location analysis on whether your company should expand an existing manufacturing plant or close the plant and move to a larger plant recently vacated by a bankrupt firm. Write a one-page memo to your CEO, outlining the factors you will consider in your analysis

(2) What are the potential benefits and drawbacks of locating in foreign countries?

(3) An entrepreneur producing pottery is now considering the addition of a new plant. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents

• What volume per month is required in order to break even?
• What profit would be realised on a monthly volume of 61,000 units?
• What volume is needed to obtain a profit of $16,000 per month?