Point of Indifference
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This analysis is for graduate level Operations Managment course.
Consider the mathematical model for point of indifference:
Company XYZ is considering a location move. The selling price of $10 per customer will stay the same. The company's goal is to make money now and in the future.
Current State: Fixed Cost $2,000, Variable Cost $5
Future State: Fixed Cost $12,000, Variable Cost $2
1. How many customers do you need to invest in the new fixed cost of $12,000 and move to the new location?
2. What is the difference between a breakeven point model and the point of indifference model?
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Solution Summary
This solution shows step-by-step calculations to determine the fixed cost with respect tot he variable cost and factor x, and it also differentiates between the breakeven point model and the point of indifference.
Solution Preview
This analysis is for graduate level Operations Managment course.
Consider the mathematical model for point of indifference:
Company XYZ is considering a location move. The selling price of $10 per customer will stay the same. The company's goal is to make money now and in the future.
Current State: Fixed Cost $2,000, Variable Cost $5
Future State: Fixed Cost $12,000, Variable Cost $2
1. How many customers do you need to invest in the new fixed cost of $12,000 and move to the new location?
2. What is the difference between a breakeven ...
Purchase this Solution
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