Explain production and shipping costs, Operation Management

Assignment Help:

Blue Computers, a major PC manufacturer in the United States, currently has plants in Kentucky and Pennsylvania. The Kentucky plant has a capacity of 1 million units a year and the Pennsylvania plant has a capacity of 1.5 million units a year. The firm divides the United States into five markets: Northeast, Southeast, Midwest, South, and West. Each PC sells for $1,000. The firm anticipates a 50 perc~nt growth in demand (in each region) this year (after which demand will stabilize) and wants to build a plant with a capacity of 1.5 million units per year to accommodate the growth. Potential sites being considered are in North Carolina and California. Currently the firm pays federal, state, and local taxes on the income from each plant. Federal taxes are 20 percent of income, and all state and local taxes are 7 percent of income in each state. North Carolina has offered to reduce taxes for the next 10 years from 7 percent to 2 percent. Blue Computers would like to take the tax break into consideration when planning its network. Consider income over the next 10 years in your analysis. Assume that all costs remain unchanged over the 10 years. Use a discount factor of 0.1 for your analysis. Annual fixed costs, production and shipping costs per unit, and current regional demand (before the 50 percent growth) are shown in Table 5-13. (a) If Blue Computers sets an objective of minimizing total fixed and variable costs, where should they build the new plant? How should the network be structured? (b) If Blue Computers sets an objective of maximizing after-tax profits, where should they build the new plant? How should the network be structured? Variable Production and Shipping Cost ($/Unit) Annual Fixed Cost Northeast Southeast Midwest South West (Million$) Kentucky 185 180 175 175 200 150 Pennsylvania 170 190 180 200 220 200 N. Carolina 180 180 185 185 215 150 California 220 220 195 195 175 150 Demand ('000 units/month) 700 400 400 300 600


Related Discussions:- Explain production and shipping costs

Explain interpersonal skills, You work in a new organization. You have been...

You work in a new organization. You have been charged with recruiting a manager for a new department within the Services division. The Vice President of the Services division stres

Describe future of global air transportation, What do you predict for the f...

What do you predict for the future of global air transportation?

Describe does anyone have a screenshot of page, Does anyone have a screensh...

Does anyone have a screenshot of page 91 so that I can do question 3.14? My book has not come in yet and the eBook trail that I have been using does not have that question in it. I

Explain the project charter, Which of the following documents serves as an ...

Which of the following documents serves as an informal contract between the project team and the project sponsor? A. The team members employment contracts B. The project char

Case studies, Bloomsday Outfitters produces T-shirts for road races. They n...

Bloomsday Outfitters produces T-shirts for road races. They need to acquire some new stamping machines to produce 30,000 good T-shirts per month. Their plant operates 200 hours per

Examine netflix''s current strategy, Evaluate Netflix's current strategy an...

Evaluate Netflix's current strategy and determine if the strategy is sustainable. Identify a Netflix strength may be leveraged in the market place to ensure a competitive advantage

Evolution of operation management, How operations evolved from industrial r...

How operations evolved from industrial revolution to internet revolution?

Sceduling for the short term, what are the advantage to finite capacity sch...

what are the advantage to finite capacity scheduling ?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd