Answer:
A)
It is weight loosing process, i.e. the weight of shipped
out material is lesser than the weight of shipped in material. As 3
tons of raw material shipped (2 iron ore and 1 coal) produces 1 ton
of steel to be shipped.
B)
It should be located in City A. As the product
transported for 1 ton of steel is 3tons (Input) for city A and is 1
ton for City B(Output).
So if located in B, the transportation cost will be for 3 ton.
Where as it is for 1 ton only in case of locating in city A.
The reason we are not exploring the possibility of locating in
between is that: we have a fixed cost, so rather than having that
fixed cost incurred at both the city, it is cost effective to incur
it at one city by locating facility in other city.
C)
Now the transportation required for 1 ton of steel is 2
ton (input ore) for city A and 2 ton (1 ton coal and 1 ton steel
output).
So using similar approach as used in B) , we can have facility in
any of the city.
Hence In this case facility can be located in any city A or
B
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