A Company Supplies Goods to Three Customers, Each of Whom

question 56

Essay

A company supplies goods to three customers, each of whom requires 50 units. The company has two warehouses. In Warehouse 1, 75 units are available, and in Warehouse 2, 55 units are available. The costs of shipping one unit from each warehouse to each customer are shown in the table below. There is a penalty for each unsatisfied customer unit of demand - with customer 1, a penalty cost of $100 is incurred; with customer 2, $90; and with customer 3, $115.
-Determine how to minimize the sum of shortage and shipping costs.

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Definitions:

Trend Factors

Variables or elements that influence the direction or rate of movements in data over time, often used in forecasting future financial or economic activity.

Normal Level

A standard or average condition, often referring to the usual level of production activity or economic operation under normal circumstances.

Support Departments

Divisions within an organization that provide essential services or support to production departments but do not directly create products or services.

Production Departments

Divisions within a manufacturing organization responsible for specific production processes or tasks.