Table 97
Sagebrush Company Has Four Warehouses (A, B, C, and and D)

question 116

Multiple Choice

Table 9.7
Sagebrush Company has four warehouses (A, B, C, and D) that require monthly shipments of 250, 200, 300, and 200 units per month, respectively. Its three plants (1, 2, and 3) have monthly capacities of 300, 400, and 250, respectively. Shipping costs (in $) follow. A blank transportation method tableau is provided below.
Warehouse
$$\begin{array} { | c | c | c | c | c | } \hline \text { Plant } & \mathrm { A } & \mathrm { B } & \mathrm { C } & \mathrm { D } \\\hline 1 & 17 & 16 & 16 & 16 \\2 & 15 & 18 & 16 & 17 \\3 & 18 & 15 & 18 & 16 \\\hline\end{array}$$

-Use the information in Table 9.7.What is the cost of a plan that ships 150 units from 1 to C,150 units from 1 to D,250 units from 2 to A,150 units from 2 to C,200 units from 3 to B,and 50 units from 3 to D?

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.

Net Operating Income

Income before interest and income taxes have been deducted.

Drop Product

A strategy or decision by a company to discontinue the production, sale, or support of a product line or item.

Special Order

A one-time order that is not considered part of the company’s normal ongoing business.