A Company Currently Has Two Factories: F1 and F2,and Three

question 2

Essay

A company currently has two factories: F1 and F2,and three retail outlets: R1,R2,and R3.The shipping costs per unit along with the monthly capacity and demand requirements are summarized below:
$\begin{array}{l}\text { Shipping Cost Per Unit }\\\begin{array}{lllll}& \mathrm{R} 1 & \mathrm{R} 2& \mathrm{R} 3&\text { Supply } \\\text { F1 } &\$3&\$2&\$4&100\\\text { F2 } & \$ 1 & \$ 3 &\$5&200 \\\text { Demand } & 100 & 100 & 200 &\end{array}\end{array}$
The firm has decided to build a new factory to expand its productive capacity.The two sites being considered are Philadelphia and Pittsburgh.The estimated shipping costs for the new factories along with their estimated fixed cost and production capacity are summarized below:

Which of the new locations will yield the lowest cost in combination with the existing factories and retail outlets?

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Definitions:

Disinflation

A reduction in the rate of inflation, indicating a slowdown in the rate at which prices for goods and services rise.

CPI

A gauge called the Consumer Price Index tracks the overall cost of a varied mix of consumer items and services like food, healthcare, and transport, by measuring their weighted average prices.

Cost Of Living

The amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a particular place and time.

Base Year

A specific year chosen as a point of reference for comparing economic data, such as price levels, over time.