An independent MRI services company wishes to expand its present
operation by adding another center. Four locations have been studied.
Each potential site would have the same labor and materials costs of
$200 per procedure. The MRIs generate revenue of $375 irrespective of
location. Rental and equipment costs per year for the four sites are as
follows:
Location A:
$525,000
Location B:
$585,000
Location C:
$480,000
Location D:
$610,000
a. Determine the volume necessary at each location to realize
$2,000,000 in profits, and which location is the most likely candidate.
b. If the expected volumes of MRIs are, respectively, 15,500, 20,200,
18,300, and 19,200 for locations A, B, C, and D, which location should
be chosen?
