4 The city engineer and economic development directors are evaluating two sites for construction of a multipurpose sports arena. Thesites are downtown (DT) and southwest (SW) of the metropolitan area. The city already owns enough land at the DT site; however, theland for a parking garage will cost $1 million, and construction costs will be $12 million for the parking garage, infrastructure relocation,and drainage. The SW site is 30 km from downtown, but the land will be donated by a developer who knows that an arena at this sitewill dramatically increase the value of the remainder of his land holdings. Because of its centralized location, there will be greaterattendance at most of the events held at the DT site. This will result in more revenue to vendors and local merchants in the amount of$500,000 per year. Additionally, the average attendee will not have to travel as far, resulting in annual benefits of $400,000 per year.All other costs and revenues are expected to be the same at either site. If the city uses a discount rate of 8% per year, and willconstruct at one site or the other, which site should be selected? Use a 30-year study period.The AB/C ratio isSelect site(Click to select)

A benefit-cost ratio (BCR) is a ratio utilized in a cost-benefit examination, to sum up, the general…

Answered: The city engineer and economic…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A chain restaurant wants to open a new location. It is considering three (3) potential sites for the new restaurant. One location is downtown, the other location is in the suburbs and the final location is at the city limits. The downtown location will have monthly fixed costs of $9,500 and labor and materials at $3.75 an order. The suburb location will have a monthly fixed cost of $8,200 and labor and materials at $3.00 an order. The city limits locations will have a monthly fixed cost of $5,500 and labor and materials at $3.85 an order. The average price per order is $15.50 A. The restaurant chain's business analyst is using three different demand levels for each location 1,000 units, 800 units and 500 units. Determine the profitable of each potential location using each of the demand levels. B. At what demand level is each potential location most profitable? C. At what demand level is each potential location least profitable?
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering two alternatives, A (new location), B (expand existing facilities). Alternative A would involve fixed costs of $250,000 per year, and variable costs would be $500 per boat. Alternative B would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. a. At what volume of output would the two locations have the same total cost? b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? Formulas: Total Cost= FC + VQ Total Profit= Q (R-V) - FC
2. Cami-Clothes Cleaners is a dry cleaning business that is considering four possible sites for its new operation. The annual fixed and variable costs for each site have been estimated as follows: Fixed Costs $350,000 $170,000 $100,000 $250,000 Variable Costs $5/Unit $25/Unit $40/Unit $20/Unit Location A B C D a. If demand is expected to be 10,000 units per year, which is the best location?
Metro has initiated discussions on attracting rail service. A depot would need to be constructed, which would require $2.5million in land and $7.5 million in construction costs. Annual operating and maintenance costs (O&M) for the facility would be $150,000, and personnel costs would be an additional $110,000. Other assorted costs would be born by the railroad and federal authorities. Annual benefits (B) of the rail service are estimated as listed: $120,000 for Railroad annual payments, $25,000 for Rail tax charged to passengers, $20,000 for Convenience benefits to local residents, and $12,000 for Additional tourism dollars for Metro. Apply the B-C ratio method, with a MARR of 8% per year and 20 year study period, to determine if the rail service should be established. a. BC ratio=2.12, good project b. BC ratio=-1.76, good project c. BC ratio=1.69, good project d. BC ratio=0.14, not good project
A retired auto mechanic hopes to open a rustproofing shop. Customers would be local new-car dealers. Two locations are being considered, one in the center of the city and one on the outskirts. The central city location would involve fixed monthly costs of $7,000 and labor, materials, and transportation costs of $30 per car. The outside location would have fixed monthly costs of $4,700 and labor, materials, and transportation costs of $40 per car. The dealer price at either location will be $90 per car. a. Which location will yield the greatest profit if monthly demand is (1) 200 cars? (2) 300 cars?b. At what volume of output will the two sites yield the same monthly profit? Can you show me the steps in excel?
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to the nearest whole number. Do not include the indifference point in your answer.) A B C → OA OB OC or to to more b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? C. What other…
Site A is a series of abandoned homes. These homes are not currently owned by the City of Detroit. The City is wanting to obtain Brownfields money to assess the homes for possible asbestos, hazardous materials and demolition costs. Finally, the city is looking for investors to redevelop the site into multi-story rental property for students. Site C is an old abandoned bus garage and terminal that the city already owns. From 1935 to 1968 the City of Morgantown operated it own public bus system. In 1955 the City of Detroit constructed a new maintenance garage and terminal to maintain and park buses at night. As more individuals purchased their own vehicles the need for public transit declined and in 1968 the City of Detroit closed the garage and terminal. As people retire and passed away the terminal was long forgotten. With the growth of Detroit, in the last ten years and the increasing number of demolition projects involving abandoned properties it was determined that the abandoned…
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities).Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $260,000 per year, and variable costs would be $610 per boat. Subcontracting would involve a cost per boat of $2,570, and expansion would require an annual fixed cost of $61,000 and a variable cost of $1,090 per boat.
Consider this data for three potential locations A1, A2, and A3. factor weight A1 A2 A3 initial cost 100 150 140 traffic 12 40 40 30 maintenance 2 20 25 18 dock space 25 10 12 neighborhood 4 12 8 15 What is the composite score for the alternative "A2"? (Compute composite score as the sum of (weight times score) - i.e. you do not have to convert weights to add to one)
Peggy Lane Corp., a producer of machine tools, wants to move to a larger site. Two alternative locations have been identified: Bonham and McKinney Bonham would have fixed costs of $780,000 per year and variable costs of $15,000 per standard unit produced McKinney would have annual fixed costs of $920,000 and variable costs of $13,800 per standard unit. The finished items sell for $30,000 each. a) The volume of output at which both the locations have the same profit = standard units (round your response to the nearest whole number). b) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Bonham is superior below c) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, McKinney is superior above d) The break-even point for Bonham is The break-even point for McKinney is units. (Enter your response rounded to the nearest whole number) units. (Enter your response rounded to the nearest whole number) standard…
Mick Karra is the manager of MCZ Drilling products which produces a variety of especially valves for oil field equipment. Recent activity in the oil fields has cause demand to increase drastically, and a decision has been made to open a new manufacturing facility. Three locations are being considered, and the size of the facility would not be the same in each location Thus, overtime might be necessary at times. The folowing table gives the total monthly cost (in 1000s) for each possible location under each demand posibility. The probabilities for the demand levels have been determined to be 20% for low demand, 30% for medium demand, and 50% for high demand Demand is Low Demand is medium Demand is High Ardmore, OK 85 110 150 Sweetwater, TX 90 100 120 Lake Charles, LA 110 120 130 (a) Which location would be selected based on the optimistic criterion? (b) which location would be selected based on the pessimistic criterion? (c) which location would be selected based on the…
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives. A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $315,000 per year, and variable costs would be $600 per boat. Subcontracting would involve a cost per boat of $2,580, and expansion would require an annual fixed cost of $58,000 and a variable cost of $1,040 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells blank be certain to enter "0" wherever required. Round your answers to the nearest whole number.) A B C or to OA OB OC to more b. Which alternative would yield the lowest total cost for an expected annual volume of 90 boats? c. What other factors might be considered in choosing between expansion…

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