17 Maurice’s Pump Manufacturing Company currently maintains plants in Atlanta and Tulsa that supply major distribution centers in Los Angeles and New York. Because of an expanding demand, Maurice has decided to open a third plant and has narrowed the choice to one of two cities—New Orleans or Houston. The pertinent production and distribution costs, as well as the plant capacities and distribution center demands, are shown in the following table.

DISTRIBUTION CENTERS PLANTS LOS ANGELES NEW YORK CAPACITY PRODUCTION COST

(per unit)

Atlanta

(existing)

$8 $5 600 $6 Tulsa

(existing)

$4 $7 900 $5 New Orleans

(proposed)

$5 $6 500 $4

( anticipated )

Houston

(proposed)

$4 $6 500 $3

( anticipated )

Forecast demand 800 1,200 Which of the new possible plants should be opened?