Based on the numbers in the case, is the construction of the plant (packaging and brewery) in Virginia a good idea? Choose all the answers you think are correct.
a. Yes, having a local packaging facility may reduce transportation costs.
b. No to the packaging facility idea; savings of $2.50 per barrel in transportation costs amount to an annual payback of $6 on an investment of 95, or 6.3%.
c. This is not a significant upside without even considering risks.
d. Yes, building a local brewery makes sense for a firm moving east, especially when they can find a water source with equally excellent water quality as the one they have in the Rocky Mountains.
e. No, there is excess capacity in the East; see the example from the case of the Miller plant in Ohio. Why add brewing capacity? It may be better to get it from someone else.