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 expected profit function to be maximized, A foundry receives an ord...

A foundry receives an order for specialty castings. Cost of producing each casting is estimated to be $15,000. The customer requires that exactly 4 good castings be supplied. The c

What is home improvement and building supply chain, Home-Base, a home impro...

Home-Base, a home improvement and building supply chain, is going to build a new warehouse facility to serve its stores in six North Carolina cities-Charlotte,Winston-Salem, Greens

Explain key elements required to provide proper healthcare, • Describe key ...

• Describe key elements required to provide proper healthcare from financial and operative perspectives, while maintaining focus on disbursements of healthcare services. • The p

Ramjee Somjee Dutt, After working for 30 years, Ramjee Somjee Dutt opted fo...

After working for 30 years, Ramjee Somjee Dutt opted for VRS and started a courier company and did very well in the first four years. He was now looking for expansion of his busine

Determine the order winning criteria for organisation, 1. What are the orde...

1. What are the order winning criteria for this organisation? Where does the company sit in Schmenner's Service-Process matrix and can you detect the adoption of the principles und

Value of a Loyal Customer (VLC), A manufacturer of business copier workstat...

A manufacturer of business copier workstations has a 75 percent customer retention rate. Their accounting department estimates the incremental contribution to profit and overhead

Explain messages are transmitted from low speed terminals, Messages are tra...

Messages are transmitted from low speed terminals and arrive at a message concentrator at a Poisson rate of 600/hr. They are held in a buffer until a hi-speed trunk line is free to

Define the local convenience store makes personal pan pizzas, The local con...

The local convenience store makes personal pan pizzas. Currently, their process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of $20,000, and

Describe current trends in employee benefits, 1) Discuss current trends in ...

1) Discuss current trends in employee benefits and how they might affect workers. 2) Explain what factor is most important for a culture to be successful and the role cultural stre

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