Location Stages in Facility Location Decisions Determining the need for a new facility Identifying...

LocatioLocationn

Stages in Facility Stages in Facility Location DecisionsLocation Decisions

DeterminingDetermining the need for a new the need for a new

facilityfacility

Identifying the relevant factors Identifying the relevant factors in selecting a locationin selecting a location

Selecting a general locationSelecting a general location

Selecting a siteSelecting a site

Determining the Need Determining the Need for a New Factoryfor a New Factory

Change in demand, up or downChange in demand, up or down

New productNew product

Changes in the economics of the Changes in the economics of the business, e.g. labour costs, material business, e.g. labour costs, material costs, material sources, supporting costs, material sources, supporting industriesindustries

Government action, I.e. on Government action, I.e. on environmental groundsenvironmental grounds

Determining the Need Determining the Need for a New Factoryfor a New Factory

Plant Size

Production Costs

Transport Costs

Total Costs

Ideal Plant Size

Stages in Facility Stages in Facility Location DecisionsLocation Decisions

DeterminingDetermining the need for a new the need for a new

facilityfacility

Identifying the relevant factors Identifying the relevant factors in selecting a locationin selecting a location

Selecting a general locationSelecting a general location

Selecting a siteSelecting a site

Strategic Strategic Considerations in Considerations in Facility LocationFacility Location Access to markets, ie EUAccess to markets, ie EU

Nissan, Toyota & Honda invested $2.6 Nissan, Toyota & Honda invested $2.6 billion in UKbillion in UK

Responsiveness to CustomersResponsiveness to Customers

Access to technologyAccess to technology

Location Decisions - Location Decisions - ManufacturingManufacturing

Favorable Labour ClimateFavorable Labour Climate Proximity to MarketsProximity to Markets Quality of LifeQuality of Life Proximity to SuppliersProximity to Suppliers Proximity to Parent CompanyProximity to Parent Company Utilities, Taxes, and Real Estate Utilities, Taxes, and Real Estate

CostsCosts

Location Decisions Location Decisions - Services- Services

Proximity to CustomersProximity to Customers Transportation Costs and Transportation Costs and

Proximity to MarketsProximity to Markets Location of CompetitorsLocation of Competitors Site-specific FactorsSite-specific Factors

Locating a Single Locating a Single FacilityFacility

On-site expansionOn-site expansion

++ Keeps management togetherKeeps management together

++ Reduces construction time & Reduces construction time & costscosts

++ Avoids splitting up operationsAvoids splitting up operations

-- Diseconomies of scaleDiseconomies of scale

-- Poor materials handlingPoor materials handling

-- Increasingly complex Increasingly complex production controlproduction control

-- Lack of spaceLack of space

Building a new plantBuilding a new plant

++ Reduced risk of complete loss Reduced risk of complete loss of of production due to production due to accidentaccident

++ Escape unproductive labourEscape unproductive labour++ Modernise with new Modernise with new

machinerymachinery

++ Reduce transport costsReduce transport costs

Relocate ( move out of existing facility Relocate ( move out of existing facility ))

-- Relocating firms tend to be Relocating firms tend to be smallsmall

-- They don’t move very farThey don’t move very far

-- Often single-plant companies Often single-plant companies needing needing more space and needing more space and needing to redisign to redisign their production their production processes and layoutsprocesses and layouts

LocatioLocationnHealth-WatchHealth-Watch

LocatioLocationnHealth-WatchHealth-WatchNorth

PittsburghHarrisburg

Philadelphia

Scranton

Uniontown

State College

Philadelphia

Scranton

Uniontown

State College

Location Factor Weight Score

Total Patient miles per month 25 4Facility utilization 20 3Average time per emergency trip 20 3Expressway accessibility 15 4Land and construction costs 10 1Employee preference 10 5

Philadelphia

Scranton

Uniontown

State College

Weighted Score

Philadelphia

Scranton

Uniontown

State College

WS = (25 x 4)

Weighted Score

Philadelphia

Scranton

Uniontown

State College

WS = (25 x 4) + (20 x 3)

Weighted Score

Philadelphia

Scranton

Uniontown

State College

WS = (25 x 4) + (20 x 3) + (20 x 3)

Weighted Score

Philadelphia

Scranton

Uniontown

State College

WS = (25 x 4) + (20 x 3) + (20 x 3) + (15 x4) + (10 x 1) + (10 x 5)

Weighted Score

Philadelphia

Scranton

Uniontown

State College

WS = 340

Weighted Score

LocatioLocationnHealth-WatchHealth-WatchErie

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

State CollegeB (175, 100)

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

Euclidean distanceEuclidean distance

dAB = ( xA - xB )2 + ( yA - yB )2

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

dAB = (50 - 175 )2 + (185 - 100 )2

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

dAB = (50 - 175 )2 + (185 - 100 )2

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

dAB = 151.2 miles

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

151.2 miles151.2 miles

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

Rectilinear distanceRectilinear distance

dAB = | xA - xB | + | yA - yB |

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

dAB = | 50 - 175 | + | 185 - 100 |

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

dAB = | 50 - 175 | + | 185 - 100 |

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

dAB = 210 miles

A(50, 185)

Philadelphia

Scranton

Uniontown

miles)

x (miles)50 100 150 200 250 300

210 miles210 miles

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

(a) Locate at C (5.5, 4.5)(a) Locate at C (5.5, 4.5)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

CensusCensus Population Population DistanceDistanceTractTract ((xx,,yy)) ((ll)) ((dd)) ldld

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22

5.5 - 2.5 = 35.5 - 2.5 = 3

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22

5.5 - 2.5 = 35.5 - 2.5 = 34.5 - 4.5 = 04.5 - 4.5 = 0

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 3 + 0 = 33 + 0 = 3

5.5 - 2.5 = 35.5 - 2.5 = 34.5 - 4.5 = 04.5 - 4.5 = 0

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 3 + 0 = 33 + 0 = 3 66

2 * 3 = 62 * 3 = 6

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 3 + 0 = 33 + 0 = 3 66

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 3 + 0 = 33 + 0 = 3 66EE (8, 5)(8, 5) 1010

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 3 + 0 = 33 + 0 = 3 66EE (8, 5)(8, 5) 1010 2.5 + 0.5 = 3 2.5 + 0.5 = 3

8 - 5.5 = 2.58 - 5.5 = 2.55 - 4.5 = 0.55 - 4.5 = 0.5

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 3 + 0 = 33 + 0 = 3 66EE (8, 5)(8, 5) 1010 2.5 + 0.5 = 32.5 + 0.5 = 3 3030

10 * 3 = 3010 * 3 = 30

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 3 + 0 = 33 + 0 = 3 66EE (8, 5)(8, 5) 1010 2.5 + 0.5 = 32.5 + 0.5 = 3 3030

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

TractTract ldldAA 66BB 2525CC 00DD 2121EE 3030FF 8080GG 7777

TotalTotal239239

(b) Locate at F (7, 2)(b) Locate at F (7, 2)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

TractTract ldldAA 1414BB 2525CC 4040DD 1414EE 4040FF 00GG 3535

TotalTotal168168

Alternative LocationsAlternative Locations

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

Alternative LocationsAlternative Locations

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

228168218

Center of Gravity ApproachCenter of Gravity Approach

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

iles) CensusCensus Population PopulationTractTract ((xx,,yy)) ((ll)) lxlx lyly

AA (2.5, 4.5)(2.5, 4.5) 22BB (2.5, 2.5)(2.5, 2.5) 55CC (5.5, 4.5)(5.5, 4.5) 1010DD (5, 2)(5, 2) 77EE (8, 5)(8, 5) 1010FF (7, 2)(7, 2) 2020GG (9, 2.5)(9, 2.5) 1414

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55BB (2.5, 2.5)(2.5, 2.5)CC (5.5, 4.5)(5.5, 4.5)DD (5, 2)(5, 2)EE (8, 5)(8, 5)FF (7, 2)(7, 2)GG (9, 2.5)(9, 2.5)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5)CC (5.5, 4.5)(5.5, 4.5)DD (5, 2)(5, 2)EE (8, 5)(8, 5)FF (7, 2)(7, 2)GG (9, 2.5)(9, 2.5)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5)CC (5.5, 4.5)(5.5, 4.5)DD (5, 2)(5, 2)EE (8, 5)(8, 5)FF (7, 2)(7, 2)GG (9, 2.5)(9, 2.5)

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5) 55 12.512.5 12.512.5CC (5.5, 4.5)(5.5, 4.5) 1010 5555 4545DD (5, 2)(5, 2) 77 3535 1414EE (8, 5)(8, 5) 1010 8080 5050FF (7, 2)(7, 2) 2020 140140 4040GG (9, 2.5)(9, 2.5) 1414 126126 3535

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5) 55 12.512.5 12.512.5CC (5.5, 4.5)(5.5, 4.5) 1010 5555 4545DD (5, 2)(5, 2) 77 3535 1414EE (8, 5)(8, 5) 1010 8080 5050FF (7, 2)(7, 2) 2020 140140 4040GG (9, 2.5)(9, 2.5) 1414 126126 3535

TotalsTotals 6868 453.5453.5205.5205.5

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5) 55 12.512.5 12.512.5CC (5.5, 4.5)(5.5, 4.5) 1010 5555 4545DD (5, 2)(5, 2) 77 3535 1414EE (8, 5)(8, 5) 1010 8080 5050FF (7, 2)(7, 2) 2020 140140 4040GG (9, 2.5)(9, 2.5) 1414 126126 3535

TotalsTotals 6868 453.5453.5205.5205.5

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5) 55 12.512.5 12.512.5CC (5.5, 4.5)(5.5, 4.5) 1010 5555 4545DD (5, 2)(5, 2) 77 3535 1414EE (8, 5)(8, 5) 1010 8080 5050FF (7, 2)(7, 2) 2020 140140 4040GG (9, 2.5)(9, 2.5) 1414 126126 3535

TotalsTotals 6868 453.5453.5205.5205.5

453.568

205.568

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5) 55 12.512.5 12.512.5CC (5.5, 4.5)(5.5, 4.5) 1010 5555 4545DD (5, 2)(5, 2) 77 3535 1414EE (8, 5)(8, 5) 1010 8080 5050FF (7, 2)(7, 2) 2020 140140 4040GG (9, 2.5)(9, 2.5) 1414 126126 3535

TotalsTotals 6868 453.5453.5205.5205.5

453.568

205.568

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

AA (2.5, 4.5)(2.5, 4.5) 22 55 99BB (2.5, 2.5)(2.5, 2.5) 55 12.512.5 12.512.5CC (5.5, 4.5)(5.5, 4.5) 1010 5555 4545DD (5, 2)(5, 2) 77 3535 1414EE (8, 5)(8, 5) 1010 8080 5050FF (7, 2)(7, 2) 2020 140140 4040GG (9, 2.5)(9, 2.5) 1414 126126 3535

TotalsTotals 6868 453.5453.5205.5205.5

x* = 6.67

y* = 2.96

(2.5, 4.5) [2]

(2.5, 2.5) [5] (5, 2)

[7](7, 2) [20]

(9, 2.5) [14]

(8, 5) [10]

(5.5, 4.5) [10]

x (miles) East1 2 3 4 5 6 7 8 9 10

miles)

iles) x* = 6.67

y* = 2.96

LocatioLocationnBreak-Even AnalysisBreak-Even Analysis

Fixed CostsFixed Costs Variable CostsVariable Costs Total CostsTotal CostsCommunityCommunity per Yearper Year per Unitper Unit (Fixed + Variable)(Fixed + Variable)

AA $150,000$150,000 $62$62BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30

For 20,000 unitsFor 20,000 units

Total Variable CostsTotal Variable Costs

AA $150,000$150,000 $62$62BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30

$62 (20,000)$62 (20,000)

AA $150,000$150,000 $62$62BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30

$62 (20,000) = $1,240,000$62 (20,000) = $1,240,000

AA $150,000$150,000 $62$62 $1,390,000$1,390,000BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30

$62 (20,000) = $1,240,000$62 (20,000) = $1,240,000

AA $150,000$150,000 $62$62 $1,390,000$1,390,000BB $300,000$300,000 $38$38CC $500,000$500,000 $24$24DD $600,000$600,000 $30$30

$62 (20,000) = $1,240,000$62 (20,000) = $1,240,000

AA $150,000$150,000 $62$62 $1,390,000$1,390,000BB $300,000$300,000 $38$38 $1,060,000$1,060,000CC $500,000$500,000 $24$24 $ 980,000$ 980,000DD $600,000$600,000 $30$30 $1,200,000$1,200,000

LocatioLocationn

Q (thousands of units)

2 4 6 8 10 12 14 16 18 20 22

al cost

ollars

) Break-Even AnalysisBreak-Even Analysis

Fixed CostsFixed Costs Total CostsTotal CostsCommunityCommunity per Yearper Year (Fixed + Variable)(Fixed + Variable)

AA $150,000$150,000 $1,390,000$1,390,000BB $300,000$300,000 $1,060,000$1,060,000CC $500,000$500,000 $ 980,000$ 980,000DD $600,000$600,000 $1,200,000$1,200,000

LocatioLocationn

2 4 6 8 10 12 14 16 18 20 22

al cost

ollars

AA $150,000$150,000 $1,390,000$1,390,000BB $300,000$300,000 $1,060,000$1,060,000CC $500,000$500,000 $ 980,000$ 980,000DD $600,000$600,000 $1,200,000$1,200,000 A

(20, 1390)

(20, 1200)

(20, 1060)

(20, 980)

LocatioLocationn

(20, 1390)

(20, 1200)

(20, 1060)

(20, 980)

A best

Break-even pointBreak-even point

2 4 6 8 10 12 14 16 18 20 22

al cost

ollars

AA $150,000$150,000 $1,390,000$1,390,000BB $300,000$300,000 $1,060,000$1,060,000CC $500,000$500,000 $ 980,000$ 980,000DD $600,000$600,000 $1,200,000$1,200,000

B best

(20, 1390)

(20, 1200)

(20, 1060)

(20, 980)

A best

2 4 6 8 10 12 14 16 18 20 22

al cost

ollars

)Fixed CostsFixed Costs Total CostsTotal Costs

CommunityCommunity per Yearper Year (Fixed + Variable)(Fixed + Variable)

AA $150,000$150,000 $1,390,000$1,390,000BB $300,000$300,000 $1,060,000$1,060,000CC $500,000$500,000 $ 980,000$ 980,000DD $600,000$600,000 $1,200,000$1,200,000

C best

(20, 980)

B best

LocatioLocationn

(20, 1390)

(20, 1200)

(20, 1060)

A best

2 4 6 8 10 12 14 16 18 20 22

al cost

ollars

AA $150,000$150,000 $1,390,000$1,390,000BB $300,000$300,000 $1,060,000$1,060,000CC $500,000$500,000 $ 980,000$ 980,000DD $600,000$600,000 $1,200,000$1,200,000

2 4 6 8 10 12 14 16 18 20 22

A best B best C best

6.25 14.3

(20, 1390)

(20, 1200)

(20, 1060)

(20, 980)

al cost

ollars

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