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.

Question

Quizplus · Accepted Answer

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.

If Facilities Have Lower Fixed Costs