A British hospital chain wishes to make its first entry into the U.S. market by building a medical facility in the Midwest, a region with which its director, Doug Moodie, is comfortable because he got his medical degree at Northwestern University.

After a preliminary analysis, four cities are chosen for further consideration. They are rated and weighted according to the factors shown below:

FACTOR WEIGHT CITY CHICAGOMILWAUKEEMADISON DETROIT Costs 2.0 8 5 6 7 Need for a facility 1.5 4 9 8 4 Staff availability 1.0 7 6 4 7 Local incentives 0.5 8 6 5 9

a) Which city should Moodie select?

b) Assume a minimum score of 5 is now required for all factors.

Which city should be chosen?

• • 8.16 The fixed and variable costs for three potential manufacturing plant sites for a rattan chair weaver are shown:

SITE FIXED COST PER YEAR VARIABLE COST PER UNIT 1 $ 500 $11 2 1,000 7 3 1,700 4

a) Over what range of production is each location optimal?

b) For a production of 200 units, which site is best? Lop9