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A Firm Has Established a Distribution Network for the Supply

question 70

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A firm has established a distribution network for the supply of a raw material critical to its manufacturing. Currently there are two origins for this raw material, which must be shipped to three manufacturing plants. The current network has the following characteristics:  COSTS  Plant 1  Plant 2  Plant 3  Supply  Raw material source 1 $6$6$9400 Raw material source 2 $4$7$3600 Demand 5005005001500\1000\begin{array} { | l | r | r | r | r | } \hline \text { COSTS } & \text { Plant 1 } & \text { Plant 2 } & \text { Plant 3 } & \text { Supply } \\\hline \text { Raw material source 1 } & \$ 6 & \$ 6 & \$ 9 & 400 \\\hline\text { Raw material source 2 } & \$ 4 & \$ 7 & \$ 3 & 600 \\\hline \text { Demand } & 500 & 500 & 500 & 1500 \backslash 1000 \\\hline\end{array} The firm has identified two potential sites for a third raw material source; these are identified as Candidate A and Candidate B. From A, the costs to ship would be $9 to Plant 1, $10 to Plant 2, and $12 to Plant 3. From B, these costs would be $11, $14, and $8. The new source, wherever it is located, will have a capacity of 500 units. Solve with the transportation method. Which site should be selected?

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