A Firm Has 4 Plants That Produce Widgets The Firm Needs to Satisfy All Demand Each Day, but B

question 58

Multiple Choice

A firm has 4 plants that produce widgets. Plants A, B, and C can each produce 100 widgets per day. Plant D can produce 50 widgets per day. Each day, the widgets produced in the plants must be shipped to satisfy the demand of 3 customers. Customer 1 requires 75 units per day, customer 2 requires 100 units per day, and customer 3 requires 175 units per day. The shipping costs for each possible route are shown in the table below:
$\begin{array}{c}Shipping~ Costs&&&Customer\\per~unit~Plant&&1&2&3\\\mathrm{A} && \$ 25 & \$ 35 & \$ 15 \\\mathrm{~B} && \$ 20 & \$ 30 & \$ 40 \\\mathrm{C} && \$ 40 & \$ 35 & \$ 20 \\\mathrm{D} && \$ 15 & \$ 20 & \$ 25\end{array}$
The firm needs to satisfy all demand each day, but would like to minimize the total costs.
The firm's problem falls within which classification?

• A) Resource-allocation
• B) Cost-benefit-trade-off
• C) Transshipment problems
• D) Transportation problems
• E) Assignment problems

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Definitions:

Long-run Average Cost Curve

A curve that shows the lowest cost at which a firm can produce any given level of output in the long run, when all inputs are variable.

Monthly Production

The total quantity of goods or services produced by a company, industry, or economy over the span of a month.

Production Cost

The total expense incurred in manufacturing a product or offering a service, including raw materials, labor, and overheads.

Learning Curve

A graphical representation showing the rate of improvement in performance or a learning process as a function of experience or the number of trials.