1. A manufacturing firm is planning to open a new factory. There are four countries under consideration: USA, Canada, Mexico, and Panama. The table below lists the fixed costs and variable costs for each site. The product is mainly sold in the U.S. for $795 per unit.

Location Fixed Cost Variable cost

Canada $7,000,000 $210

Mexico $2,500,000 $250

USA $4,000,000 $230

Panama $1,500,000 $300

China $3,000,000 $270

a- Using cross-over analysis, find the range of production that makes each location optimal with lowest total cost.

b- Using Excel, construct total production cost linear graph for all 5 locations and verify cross-over points obtained in part (a). In your graph, use quantity values from 0 to 200,000 at increment of 5,000.

c- If the company forecasts that market demand will be around 130,000 per year, which country

is the best choice and what is the yearly profit?

d- Construct Total cost, Total revenue, and Total profit graphs for the optimal location in part (C).

Use quantity values from 0 to 200,000 at increment of 5,000.