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(5) Locations of Transfer-Oriented Firms The distance between the resource (R ) and the market (M) is 10 miles. A firm's procurement cost is given
(5) Locations of Transfer-Oriented Firms The distance between the resource (R ) and the market (M) is 10 miles. A firm's procurement cost is given by PC=2x2, where x is the distance from the resource measured in miles. The firm's distribution cost is given by DC=6*(10x). Again, x is the distance from the resource. (a) What is the Total Freight Cost (TC) at each milestone. This question assumes there are only 11 possible discrete locations, i.e., x=0, 1, 2, 3, ...10. Locations between the milestones are not possible. Where should the firm locate? (You can do this \"by hand\" or in a spreadsheet) (b) Now assume, the firm can locate between the milestones, for instance at x=5.145. Provide a mathematically exact solution for the optimal location (with 3 decimals). What is the optimal x? At this location, what is PC, DC and TC (three decimals). (c) How does your answer to all parts under (b) change if the marginal procurement cost PC were equal to zero everywhere
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