A newly formed firm must decide on a plant location. There aretwo alternatives under consideration: locate near the major rawmaterials or locate near the major customers. Locating near the rawmaterials will result in lower fixed and variable costs thanlocating near the market, but the owners believe there would be aloss in sales volume because customers tend to favor localsuppliers. Revenue per unit will be $177 in either case.
Omaha Kansas City
Annual fixed costs ($ millions) $ 1.2 $ 1.3
Variable cost per unit $ 27 $ 42
Expected annual demand (units) 9,750 10,350
Using the above information, determine which location wouldproduce the greater profit. (Omit the \"$\" sign in yourresponse.)
Which would produce the greater gross profit of $______________.
