A Firm Has Established a Distribution Network for the Supply

question 4

Essay

A firm has established a distribution network for the supply of a raw material critical to its manufacturing. Currently there are two origins for this raw material, which must be shipped to three manufacturing plants. The current network has the following characteristics:
$\begin{array}{|l|r|r|r|r|}\hline\text { COSTS } & \text { Plant 1 } & \text { Plant 2 } & \text { Plant 3 } & \text { Supply } \\\hline\text { Raw material source 1 } & \$ 6 & \$ 8 & \$ 9 & 400 \\\hline\text { Raw material source 2 } & \$ 4 & \$ 7 & \$ 3 & 600 \\\hline\text { Demand } & 500 & 500 & 500 & 1500 \backslash 1000\\\hline\end{array}$
The firm has identified two potential sites for a third raw material source; these are identified as Candidate A and Candidate B. From A, the costs to ship would be $9 to Plant 1, $10 to Plant 2, and $12 to Plant 3. From B, these costs would be $11, $14, and $8. The new source, wherever it is located, will have a capacity of 500 units. Solve with the transportation method. Which site should be selected?

Understand the difference between various stock valuation models and their appropriate application based on company growth expectations.

Grasp the distinction between equity and debt securities, including their valuation and legal implications.

Realize the importance of expected future cash flows in the valuation of financial assets.

Understand the effect of changes in required rates of return on stock valuation using the dividend growth model.

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Definitions:

Technological Advance

(1) An improvement in the quality of existing products, the invention of entirely new products, or the creation of new or better ways of producing or distributing products. (2) Any improvement in the methods by which resources are combined such that the same quantity of inputs can be made to yield a combination of outputs that is preferred to any combination of outputs that was previously possible.

Distributing

The process of making goods or services available to consumers, often through various channels.

Economists' Models

Simplified representations of the real world used by economists to predict economic outcomes and explore economic theories.

Technological Advance

The process of developing and applying new technologies and innovations to improve productivity, efficiency, and offerings in various sectors.