Question

You are an executive with an internet merchandizing company. Azzamon Inc. You have been assigned the task of analyzing whether to add a new warehouse in Atlanta or in Boston. A consulting firm whom you paid $100 K to do a study has narrowed the choice down to these two cities. You currently have two other warehouses in other cities. You must decide whether the following is relevant or irrelevant to the decision of where to locate the warehouse? Consultant Fee: Relevant Irrelevant

Answer 1

Answer:

Azzamon Inc.

Consultant Fee:

Irrelevant.

Explanation:

The consultant fee is not relevant to the decision of where to locate the warehouse.  It is like a sunk cost that has already been incurred.  The two cities recommended by the consultant will be considered based on their relevant statistics and data and not based on the fee paid to the consultant.  A relevant cost impacts the decision at hand.  One relevant cost for making a decision of this nature is the cost of installing facilities at the locations.