Use the Case Below to Answer the Following Question(s)

question 69

Multiple Choice

Use the case below to answer the following question(s) .
Rolling Inc.produces cars at two plants: Baltimore,Maryland,and Orlando,Florida.They ship them to major distribution centers in Minnesota,Dallas,Los Angeles,and Memphis.The Accounting,Production,and Marketing departments have provided the information in the table below,which shows the unit cost of shipping between any plant and distribution center to minimize the total transportation cost,not exceed available capacity,and meet customer demand. Suppose demand forecasts exceed the existing capacity and the company is considering adding a new plant from among two choices: Ohio or Kansas.Both plants would have a capacity of 3,000 units but only one can be built.The table below shows the revised data. Use double-subscripted variables to simplify the formulation.Define X_ij = amount shipped from plant i to distribution center j,where i = 1 represents Baltimore,and j = 1 represents Minnesota.
Define a binary variable for the decision of which plant to build: Y₁ = 1 if the Ohio plant is built,and Y₂ = 1 if the Kansas plant is built.
-Which of the following is the capacity constraint for the Orlando plant?

• A)X₂₁ + X₂₂ + X₂₃ + X₂₄ ≤ 1,600
• B)X₂₁ + X₂₂ + X₂₃ + X₂₄ ≤ 2,400
• C)X₂₁ + X₂₂ + X₂₃ + X₂₄ ≤ 3,000Y₁
• D)X₂₁ + X₂₂ + X₂₃ + X₂₄ ≥ 3,000Y₂

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Definitions:

Unit Variable Cost

The cost associated with producing one additional unit of product, including materials, labor, and other variable costs.

Fixed Costs

Overheads like rent, salaries, and insurance that stay the same, irrespective of how much is produced or sold.

Break-Even

The point at which total costs equal total revenues, resulting in no net loss or gain for a business.

Variable Cost

Costs that vary directly with the level of production or volume of output.