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 material, which must be shipped to three manufacturing plants. The current network has the following characteristics: COSTS PLANT 1 PLANT 2 PLANT 3 SUPPLY Raw Material source 1 $6 $8 $9 400 Raw Material source 2 $4 $7 $3 600 Demand 500 500 500 Supply < Demand 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?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
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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 material, which must be shipped to three
manufacturing plants. The current network has the following characteristics:

COSTS PLANT 1 PLANT 2 PLANT 3 SUPPLY
Raw Material source 1 $6 $8 $9 400
Raw Material source 2 $4 $7 $3 600
Demand 500 500 500 Supply < Demand

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?

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