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 what are merits and demerits of lvdt, What is a transducer? How can...

What is a transducer? How can we classify transducers? On what principles do the variable inductance type of transducers work? What are uses of LVDT for measurement? List uses of t

Explain self-awareness and empathy, The perceptual distortion of projection...

The perceptual distortion of projection can be controlled thru a high degree of/ 1.ethical behaviour/2.cognitive consistency/3.emotional discernment/4. self-awareness and empathy/5

Process of reengineering according to hammer and champy, Explain the proces...

Explain the process of reengineering according to Hammer and Champy. Hammer and Champy (1993) explained the process of reengineering as "the basic rethinking and radical redesi

Vertically integrated or virtual organisation, Vertically Integrated or Vir...

Vertically Integrated or Virtual Organisation An organisation might decide not to source goods or services externally but to own the supplier company itself. For instance a

Explain quality metrics, A variety of organizational culture characteristic...

A variety of organizational culture characteristics make project success more likely. The characteristics include: A. Sufficient funding B. Feasible schedule C. Respect fo

What is ethical leadership, Give an example of ethical leadership. What are...

Give an example of ethical leadership. What are the characteristics of ethical leadership? And why do you think ethical leadership is important.

How motivate the successful salesperson, 1. The chapter mentions the theory...

1. The chapter mentions the theory of transaction cost analysis (TCA). What role does TCA play in the decision to use a company sales force rather than independent manufacturers' a

Explain what is your personal entrepreneurial strategy, 1. Who was Ewing Ma...

1. Who was Ewing Marion Kauffman, what did he do, and what was his philosophy of entrepreneurial leadership? 2. What is the difference between a manager and a leader? 3. Defi

Cellular manufacturing, Hi, How to design a cell layout after forming the p...

Hi, How to design a cell layout after forming the part families and machine routing sequence. Is there any algorithm/heuristics/ mathematical models available to do it ? Please hel

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