Asked by Marcos Urbina on May 21, 2024
Verified
If facilities have lower fixed costs
A) a few high-capacity facilities are preferred because this helps lower transportation costs.
B) a few local facilities are preferred because this helps lower transportation costs.
C) many high-capacity facilities are preferred because this helps lower transportation costs.
D) many local facilities are preferred because this helps lower transportation costs.
Fixed Costs
Expenses that do not change with the level of goods or services produced, such as rent, salaries, and equipment leases.
High-Capacity Facilities
Facilities that are designed to operate at large volumes, often benefiting from economies of scale.
Transportation Costs
Expenses associated with the process of moving goods or services from one location to another.
- Understand the critical significance of technological adaptability within supply chain frameworks.
Verified Answer
AR
Alexcia Revell-LenisMay 21, 2024
Final Answer :
D
Explanation :
If facilities have lower fixed costs, it is more cost-effective to have many local facilities rather than a few high-capacity facilities. This is because transportation costs will be lower if products do not have to travel long distances to reach customers. Having many local facilities also allows for more flexibility and better responsiveness to customer demand.
Learning Objectives
- Understand the critical significance of technological adaptability within supply chain frameworks.