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The total cost curve shows the cost of total shipment from the different
cities.
- a. Please find attached the graph of the total cost to quantity of shipment created with MS Excel.
- b. The city that provides the lowest overall cost is; <u>Salt Lake City</u>.
Reasons:
The given parameters are;
The number of shipment per = From 550,000 to 600,000 per year
The given table is presented as follows;
a. Required:
The plot total cost curve for the locations on a single graph.
Solution:
- Please find attached the graph of the total cost curves created with MS Excel
b. Required:
The city that provides the lowest overall cost.
Solution:
The two cities with the lowest overall costs are Denver and Salt Lake City.
- From the total cost curve, the area under the curves are;
Area under the curve for Denver;
(7557500 + 7790000) ÷ 2 × 50,000 = 383687500000
Area under the curve for Salt Lake City
(7487500 + 7850000) ÷ 2 × 50,000 = 383437500000
Therefore;
- <u>Salt Lake City provides the lowest overall costs</u>.
Learn more about total cost curves here:
