A Manufacturing Firm Has Three Plants and Wants to Find

question 15

Multiple Choice

A manufacturing firm has three plants and wants to find the most efficient means of meeting the requirements of its four customers. The relevant information for the plants and customers, along with shipping costs in dollars per unit, are shown in the table below:
$$\text{Customer (requirement) }\\\begin{array} { l c c c c } &&&Customer ~3 &Customer ~4\\\text { Factory (capacity) } & \text { Custcmer } 1 ( 25 ) & \text { Customer } 2 ( 50 ) & ( 125 ) & ( 75 ) \\ \text { A (100) } & \$ 15 & \$ 10 & \$ 20 & \$ 17 \\ B ( 75 ) & \$ 20 & \$ 12 & \$ 19 & \$ 20 \\ \text { C (100) } & \$ 22 & \$ 20 & \$ 25 & \$ 14 \end{array}$$
How many demand nodes are present in this problem?

• A) 1
• B) 2
• C) 3
• D) 4
• E) 5

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Definitions:

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and no barriers to entry or exit, leading to price determination by market forces.

Market Power

The ability of a firm or group of firms to influence the price of a product or the conditions of the market.

Inefficiency

The lack of economic efficiency, occurring when resources are not utilized optimally according to certain criteria.

Market Power

The ability of a firm or group of firms to manipulate the price or quantity of a good or service in the market, often through controlling supply or market dominance.