A National Firm Has Beef Jerky Processing Facilities in Locations

question 46

Essay

A national firm has beef jerky processing facilities in Locations 1, 2, 3, and 4. They ship to central distributors (represented as A, B, C, and D) handling four regions of the country. The per-unit shipping costs between each possible combination of locations are shown in the following table.

The processing facility locations are capable of monthly production (in tons) as follows:
Location 1: 600
Location 2: 350
Location 3: 475
Location 4: 850
The central distributors have firm commitments for the following quantities:
Distributor A: 650
Distributor B: 725
Distributor C: 400
Distributor D: 500
What is the lowest-cost shipping arrangement that can be made between the plant locations and distributors and what is the annual shipping cost?

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Definitions:

Cash Collections

Cash collections involve the process of gathering all payments or receipts in cash form, typically from customers or clients.

Indirect Method

A method for preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Operating Activities

Transactions and events that relate to the primary operations of a company, such as sales, purchases, and expenses.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services provided on credit.