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Question 3 (20 marks) PepsiCo is contemplating locating its state-of-the-art factory in any of these three sites Durban (A), Bulawayo (B) and Gaborone (C).
Question 3 (20 marks) PepsiCo is contemplating locating its state-of-the-art factory in any of these three sites Durban (A), Bulawayo (B) and Gaborone (C). The goal is to locate the factory at a minimum cost site, where cost is measured by annual fixed plus variable costs of production. The following information has been presented to you, SITE A B ANNUALISED FIXED COST VARIABLE COST PER PRODUCT PRODUCED R10,000,000 R20,000,000 R25,000,000 R2,500 R2,000 R1,000 PepsiCo knows that it will produce between 0 and 60 000 units at the new plant each year, but this is the available knowledge regarding its production plans thus far. Provide advice using a relevant diagram on what values of volume of production if any is site C a recommended site? What volume indicates site A is optimal and over what range of volume is site B optimal and why. (Show all necessary calculations in your report). Question 4 (20 marks) As an expert in operations management one of the delegates has requested that you provide a presentation on the significance of process analysis and to provide recommendations on how this could be effectively executed in the context of PepsiCo. 2
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