Question

If facilities have higher fixed costs, many local facilities are preferred because this helps lower transportation costs.

A. TRUE
B. FALSE

Answer 1

The statement is true. Many local facilities are preferred when facilities have higher fixed costs because it helps lower transportation costs.

Step-by-step explanation:

The statement is True. When facilities have higher fixed costs, it is often more cost-effective to have many local facilities rather than a single centralized facility. This is because having many local facilities helps lower transportation costs. By locating facilities closer to customers or suppliers, companies can reduce the distance and time it takes to transport goods and materials, thus decreasing transportation costs. This is especially beneficial when there are congested street networks or jammed freeways, as locating facilities near uncrowded freeways allows for easier travel of workers and materials.