Case: Rochester Manufacturing’s Process Decision - Essay Prowess
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# Case: Rochester Manufacturing’s Process Decision

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Question 1:

## Case: Rochester Manufacturing’s Process Decision – 10 marks

Question 2:

Shoeless Joe is a specialty retailer that is deciding where to locate a new facility. The annual fixed and variable costs for each possible site have been estimated as follows: (15 marks)

1. Perform an analysis of the volume over which each location is preferable.
2. If demand is expected to be 2250 units, which location is best?
3. How does your answer change if B’s fixed costs increases by 10%?

Question 3:

Given the following list of items:

• Calculate the annual usage cost of each item. (2.5 marks)
• Classify the items as A, B, or C. (7.5 marks)

Answer 1: This question is not clearly defined and no information is provided to answer it.

• To determine the volume over which each location is preferable, the break-even point for each location needs to be calculated. The break-even point is where the total cost at each location is equal.
• The total cost for each location can be calculated as follows: Total Cost = Fixed Cost + (Variable Cost x Quantity)
• Once the total cost has been calculated for each location, the break-even point can be determined by setting the total cost equal at each location and solving for the quantity.
• If demand is expected to be 2250 units, the location with the lowest total cost is the best.
• If B’s fixed costs increase by 10%, then the break-even point would also increase, and it may not be the best location anymore. The calculation needs to be redone to determine the new best location.