location

cost components Faridabad Kolkata New Delhi The company has finan
transporation cost(Rs/unit) 10 20 9at 15% interest per ann
cost of material (Rs/unit) 120 110 100production of 5000-100
taxes (Rs/year) 40000 35000 45000
cost of construction of the factory (Rs) 5000000 4000000 4700000
electricity cost (Rs/year) 22000 15000 25000
labor (Rs/unit) 26 21 23

Fixed cost (per Annum)

location
cost components Faridabad Kolkata New Delhi
cost of construction of the factory (Rs) 750000 600000 705000
electricity cost (Rs/year) 22000 15000 25000
taxes (Rs/year) 40000 35000 45000
Total fixed cost 812000 650000 775000

total production cost

Faridabad Kolkata New Delhi

0 812000 650000 775000
5000 1592000 1405000 1435000
10000 2372000 2160000 2095000

2500000

2000000
total production cost

1500000

1000000

500000
 1000000

total
500000

0
0 5000
volume of production
The company has financed the construction cost of the factory by a loan from the SBI
at 15% interest per annum. find the economically best location option for the
production of 5000-10000units.

location
cost components FaridabadKolkata New Delhi
transporation cost(Rs/unit) 10 20 9
cost of material (Rs/unit) 120 110 100
labor (Rs/unit) 26 21 23
Total variable cost (per unit) 156 151 132

Faridabad
Kolkata
New Delhi
 New Delhi

5000 10000
ume of production
n from the SBI
or the
 Time Clocks Ltd. is considering two loaction options for locating its new clock manufacturing faci
for the facility are Rs.2million and Rs.30 per clock respectively. on the other hand Noida, the FC a
clock can be sold for Rs.100 if manufactured at Noida and same clock can be fetch Rs.120 if man
manufactured at Pune being better.

TC and TR at Noida TC and TR at Pune

Volume of Volume of
production (n) production (n)
(1000units) total cost total revenue (1000units) total cost
0 1800000 0 0 2000000
10 2200000 1000000 10 2300000
20 2600000 2000000 20 2600000
30 3000000 3000000 30 2900000
40 3400000 4000000 40 3200000
50 3800000 5000000 50 3500000

NOIDA
7000000
6000000

Total cost/total revenue

total cost total revenue 6000000
5000000 5000000
Total cost/total revenue

4000000 4000000
3000000
3000000
2000000
2000000 1000000
0
1000000 0

0
0 10 20 30 40 50
Volume of production (1000units)
ock manufacturing facility, Pune and Noida. The company estimated that the FC and VC at Pune
er hand Noida, the FC and VC are estimated at Rs. 1.8million and Rs.40 per clock respectively. A
be fetch Rs.120 if manufactured at Pune as the consumer perception of the quality products

total revenue
0
1200000
2400000
3600000
4800000
6000000

PUNE

7000000
total cost total revenue
Total cost/total revenue

6000000
5000000
4000000
3000000
2000000
1000000
0
0 10 20 30 40 50
Volume of production (1000units)
nd VC at Pune
espectively. A
y products