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Terry
0450-18-O-N-13-3e
Chan
TOPIC QUESTION - PAPER 1
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Chan
May 17, 2026 at 7:36:21 AM
Oct/Nov 2018
Version 3
4.0 Operations Management
4.4 Location Decisions
YOUR ANSWER
Although transportation cost is high, Duckett should be able to reduce cost from lower labour cost if it operates in Country Y. Duckett will also save $2400 on fixed cost. As wage rate is low, Duckett could also afford to hire more labour, increasing output. By increasing output. Duckett could achieve economies of scale, lowering the average cost. As such, Duckett should relocate to Country Y as it is a lower cost to relocate.
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