Use This Information to Answer the Following Questions Shipping Cost/unit ($)

question 40

Essay

Use this information to answer the following questions.
A company can ship its product from any of its three factories,F1,F2,and F3,to any of its retail outlets,R1,R2,and R3.The capacity,demand,and shipping cost information is provided as follows:
$\begin{array}{ll}\text { Demand (units) } & \text { Capacity (units) } \\\hline \text { R1:300 } & \text { F1:250 } \\\text { R2: } 500 & F 2: 350 \\\text { R3:200 } & \text { F3:400 }\end{array}$



Shipping Cost/unit ($)
$\begin{array}{lll}&&\mathrm{R} 1 & \mathrm{R} 2 & \mathrm{R} 3\end{array}$
$\begin{array}{llll}\mathrm{F} 1 & 1 & 3 & 2 \\ \text { F2 } & 3 & 4 & 2 \\ \text { F3 } & 2 & 2 & 3\end{array}$


-Refer to the information above.Assume that the road leading from factory F1 to retail outlet R1 is currently closed due to construction.How will this affect the shipping cost? Use Excel to formulate and solve this problem.

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Definitions:

Industry

A group of companies or businesses that produce the same products or services and are involved in the same type of economic activity.

Perfect Competitor's Demand Curve

A horizontal line reflecting a perfectly elastic demand situation where the firm can sell any quantity at the prevailing market price.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely or extremely to changes in price.

Highly Inelastic

Describes demand that is hardly responsive to changes in price, typically for necessities where consumption does not decrease significantly with a price increase.