National Foods Company has five plants where it processes and packages fruits and vegetables.

It has suppliers in six cities in California, Texas, Alabama, and Florida. The company owns and operates its own trucking system for transporting fruits and vegetables from its suppliers to its plants. However, it is now considering outsourcing all its shipping to outside trucking firms and getting rid of its own trucks. It currently spends $245,000 per month to operate its own trucking system. It has determined monthly shipping costs (in thousands of dollars per ton) of using outside shippers from each of its suppliers to each of its plants, as shown in the following table:

Processing Plants ($1,000s/ton)

Supply Suppliers Denver St. Paul Louisville Akron Topeka (tons)

Sacramento $3.7 $4.6 $4.9 $5.5 $4.3 18 Bakersfield 3.4 5.1 4.4 5.9 5.2 15 San Antonio 3.3 4.1 3.7 2.9 2.6 10 Montgomery 1.9 4.2 2.7 5.4 3.9 12 Jacksonville 6.1 5.1 3.8 2.5 4.1 20 Ocala 6.6 4.8 3.5 3.6 4.5 15 Demand (tons) 20 15 15 15 20 90 Should National Foods continue to operate its own shipping network or sell its trucks and outsource its shipping to independent trucking firms? LO.1