Help solving excel problem
Location Decisions
Version 1
As the operations manager of Ricardo Inc, manufacturer of gas grills in Central Ohio, you have to decide
where your next factory will be. There are three (3) alternative locations that you have to choose
among; China, India and Russia. You want to have two different approaches in this analysis; first one is
solely cost based (break‐even analysis) and the second one is multi criteria weighted scoring. Please
read the information below and answer the questions.
1) The fixed and unit variable costs for each of the three locations have been estimated and given
below:
Locations Annual Fixed Cost
Variable Cost per Unit
China $450,000 $200
India $500,000 $150
Russia $550,000 $120
a) The annual forecasted demand of 3000 units, draw the break even graph for these three
locations.
b) Using break‐even analysis, determine which location is the best choice.
c) If the demand is 1500 units, which location would be the best choice?
2) Your purchasing department has identified following factors and their weights in making the
location decisions.
Critical Location Factors
Factor Weight
China Scores (1‐100)
India Scores (1‐100)
Russia Scores (1‐100)
Labor Cost
0.20 100 100 90
Proximity to Market
0.15 70 80 90
Supply Chain Compatibility
0.25 80 90 70
Quality of Life
0.30 70 70 80
Stability of government
0.10 100 80 70
3) Using the information given above determine the best candidate for the new factory location.