Use the Table Below to Answer the Following Question(s) Answer the Following Question(s) Using a Linear Optimization Model

question 2

Multiple Choice

Use the table below to answer the following question(s) .
The Riviera Transport Company (RTC) produces car accessories at two plants: Dallas and Atlanta. They ship them to major distribution centers in Houston, San Jose, Jacksonville, 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, plant capacities over the next planning period, and distribution center demands. RTC's supply chain manager faces the problem of determining how much to ship between each plant and distribution center to minimize the total transportation cost, not exceed available capacity, and meet customer demand.
Assume Xij = amount shipped from plant i to distribution center j, where i = 1 represents Dallas,
i = 2 represents Atlanta, j = 1 represents Houston, and so on. $\begin{array}{|l|l|l|l|l|l|}\hline \text { Transportation } & \\\text { Model } & \\\hline & \\\hline \text { Data } & \\\hline & \begin{array}{l}\text { Distribution } \\\text { Center }\end{array} \\\hline \text { Plant } & \text { Houston } & \text { San Jose } & \text { Jacksonville } & \text { Memphis } & \text { Capacity } \\\hline \text { Dallas } & 13.00 & 15.25 & 10.99 & 18.48 & 1250 \\\hline \text { Atlanta } & 10.75 & 15.16 & 9.65 & 18.50 & 750 \\\hline \text { Demand } & 175 & 325 & 480 & 950 & \\\hline\end{array}$ Answer the following question(s) using a linear optimization model.
-Based on the Sensitivity Report on the model, which of the following is the savings on a reduction of demand of 2 units at Jacksonville?

• A) $2.5
• B) $1.25
• C) $19.48
• D) $16.98

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Definitions:

Arc Elasticity

A measure of a variable's sensitivity or responsiveness to changes in another variable, calculated over a specific range or 'arc'.

Price of Oranges

The cost at which oranges are sold or bought in the market.

Inelastic

Describes demand that is not very sensitive to changes in price, meaning that quantity demanded changes little when prices change.

Price Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in price.