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 the fit for gbi of this particular for-profit avenue, Discuss the f...

Discuss the fit for gbi of this particular for-profit avenue eileen o'brien has chosen.

How to prove inadequate for governing the new nation, Why did the Articles ...

Why did the Articles of Confederation prove inadequate for governing the new nation? (Think about: national unity under the Articles; lack of an executive branch; economic issues

Explain the importance of influence, Discuss the importance of influence. H...

Discuss the importance of influence. How you would attempt to apply it to convince your team to work an extra day per week to earn time off later. Analyze how you would influence y

Analyze the points involved in preparing a cash budget, Analyze the steps i...

Analyze the steps involved in preparing a cash budget and determine which steps presents the GREATEST number of obstacles to the GREATEST number of small businesses. Explain your r

Explain which of these costs are associated with quality, Identify signific...

Identify significant costs in the organization like Wal-Mart. Which of these costs are associated with quality? Remember, quality costs are not limited to manufacturing organizatio

Determine whether ability and motivation is more important, Determine wheth...

Determine whether ability or motivation is more important in selecting the right person for the right job. Explain your rationale.

Work study, what are all steps involved in work study

what are all steps involved in work study

Explain which one minimizes their cost, A swim club is designing a new pool...

A swim club is designing a new pool to replace its old pool. The new pool would need to last for 10 years since the club is planning on relocating after 10 years. A concrete shell

Briefly analyze two opportunities, Thoroughly research and analyze two oppo...

Thoroughly research and analyze two opportunities and two major threats that united airlines is facing

Describe the aspects of total quality management, Discuss the aspects of To...

Discuss the aspects of Total Quality Management (TQM) and how they apply in service- and product-based businesses.

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