Suppose you manage a company that produces custom closet storage equipment. You have one store, located in Miami, Florida. Due to the nature of your product, which requires a consultation with customers regarding exact dimensions and desired amenities, your market is fairly small. But you are earning economic profit and are considering whether to expand to another location.

1. Suppose you have two potential areas to which you might expand: Charlotte, North Carolina, and Orlando, Florida. What factors would you want to consider in determining which of these two cities would be the most profitable expansion option?

2. You keep a large quantity of potential parts in your warehouse and fill each order from this stock. If the size of your total operation increases, you will be able to obtain lower insurance rates on the warehouse and also qualify for reduced interest rates when you finance inventory purchases. How should these two events affect the size of your regular order of product and the frequency with which your place this order?

3. You are considering offering a new high-end product with real gold and fine antique wood shelving in addition to your current line of shelving products. What information would you need to consider in determining whether this is profitable or not?