Wiebe Trucking. Inc. is planning a new warehouse to serve the west. Denver, Santa Fe, and Salt Lake City are under consideration. For each location, annual fixed costs (rent, equipment. and Insurance) and average variable costs per shipment (labor, transportation and utilities) are listed in the following table. Sales projection is range from 550,000 to 600,000 shipments per year. a. Plot the total cost curves for all the locations on a single graph.
b. Which city provides the lowest overall costs?

The total cost curve shows the cost of total shipment from the different

cities.

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:

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.

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;

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