A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost?

A location strategy in operations management is a plan that involves determining a company's objectives and finding the right location to achieve them. Location decisions are strategic decisions that require large financial investments and are irreversible.  Here are some factors to consider when choosing a new location: Geographical proximity, Availability of skilled programmers, Costs, and Availability of amenities and services.  Here are some steps to making location decisions: Identify dominant location factors Develop location alternatives Evaluate location alternatives Make a... Show more

A location strategy in operations management is a plan that involves determining a company's objectives and finding the right location to achieve them. Location decisions are strategic decisions that require large financial investments and are irreversible. 

Here are some factors to consider when choosing a new location: Geographical proximity, Availability of skilled programmers, Costs, and Availability of amenities and services. 

Here are some steps to making location decisions:
Identify dominant location factors
Develop location alternatives
Evaluate location alternatives
Make a final selection 

Here are some other factors that affect location decisions:
Product and industry
Availability of resources
Proximity to consumers
Climate conditions
Proximity to market
Regulatory and policy issues 

Location decisions have a direct effect on an operation's costs as well as its ability to serve customers. Once made, location decisions are difficult and costly to undo.

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