Assume 1.5 tons of input (i.e., rough lumber) is required to produce 1 ton of custom cabinetry. Additionally, assume the ton-mile freight rate for finished cabinetry is $0.5 whereas the ton-mile freight rate for rough lumber is $0.25. • Is cabinet mfg. weight losing or weight gaining? Briefly explain. • What explains the relatively high ton-mile shipping cost for finished cabinets? • Should a cabinet manufacturer locate next to its inputs or market? Explain with the aid of a diagram depicting procurement, distribution costs, and total transportation costs.

Assume 1.5 tons of input (i.e., rough lumber) is required to produce 1 ton of custom cabinetry. Additionally, assume the ton-mile freight rate for finished cabinetry is $0.5 whereas the ton-mile freight rate for rough lumber is $0.25. • Is cabinet mfg. weight losing or weight gaining? Briefly explain. • What explains the relatively high ton-mile shipping cost for finished cabinets? • Should a cabinet manufacturer locate next to its inputs or market? Explain with the aid of a diagram depicting procurement, distribution costs, and total transportation costs.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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