Problem 8S-2 A toy manufacturer wants to open a third warehouse that will supply

Question

Problem 8S-2 A toy manufacturer wants to open a third warehouse that will supply three retail outlets. The new warehouse will supply 500 units of backyard playsets per week. Two locations are being studied, N1 and N2. Transportation costs for location N1 to stores A, B, and C are $6, $8, and $7 per unit, respectively for location N2, the costs are $10, $6, and $4, respectively. The existing system is shown in the following table. Which location would result in the lower transportation costs for the system? (Omit the "$" sign in your response.) Store Capacity C (Units/week To: A B From: 500 Warehouse 2 400 Demand (Units/week) 400 600350 Transportation cost Location N1 N2 Thus, location N2 results in the lower transportation costs

Explanation / Answer

N1 TRANSPORTATION COST = 6*400+8*500+7*350

= 2400+4000+2450

=8850

N2 TRANSPORTATION COST =

10*400+6*400+4*350

=4000+2400+1400

=7800

YES N2 RESULTS IN LOWER COST

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