ISBM – A company is planning to manufacture tennis rackets and has to decide location of the plant.

Operation Management

CASE STUDY (20 Marks)

A company is planning to manufacture tennis rackets and has to decide the location of the plant. The locations being considered are Mysore, Bangalore, and Hosour. The fixed costs located at these three locations are estimated to be rs. 30 lacs, rs. 50 lacs and Rs. 25 lacs per annum respectively. The variable costs are rs. 300, rs. 200 and rs. 350 per unit respectively. The expected sales price of a tennis racket is rs. 700 per unit.

Answer the following question.

Q1. Find out: the range of annual production/ sales volume for which each location is most suitable for 5000/10000/15000 units per annum.

Q2. Find out: the range of annual production/ sales volume for which each location is most suitable for 20000/25000 units per annum.