A business has customers located in Lubbock, Amarillo, and points in between as follows: Lubbock 10 customers
Question:
A business has customers located in Lubbock, Amarillo, and points in between as follows:
Lubbock 10 customers 10 miles from Lubbock 1 customer 25 miles from Lubbock 3 customers 50 miles from Lubbock 1 customer 70 miles from Lubbock 2 customers Amarillo 6 customers
a. Suppose that a separate trip must be made to each customer and that transportation costs per mile are the same for all trips to any customer. Where does the business locate to minimize transportation costs?
b. How does the solution change if four more customers are added in Amarillo?
Why?
c. How does the solution change if four more customers are added in Lubbock?
(Assume six customers in Amarillo.) Why?
Step by Step Answer:
Urban Economics And Real Estate: Theory And Policy
ISBN: 9781621577706
2nd Edition
Authors: John F. McDonald, Daniel P. McMillen