A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw
materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than
locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local
suppliers. Revenue per unit will be $189 in either case.
Annual fixed costs ($ millions)
Variable cost per unit
Expected annual demand (units)
Using the above information, determine which location would produce the greater profit. (Omit the
“$” sign in your response.)
(Click to select)
would produce the greater gross profit of $ .