P8.8 Multiplant Operation. Appalachia Beverage Company, Inc. is considering alternative proposals for expansion into the Midwest. Alternative 1: Construct a single plant in Indianapolis, Indiana, with a monthly production capacity of 300000 cases, a monthly fixed cost of $262500, and a variable cost of $3.25 per case. Alternative 2: Construct three plants, one each in Muncie, Indiana;

Normal, Illinois; and Dayton, Ohio, with capacities of 120000, 100000, and 80000, respectively, and monthly fixed costs of $120000, $110000, and $95000 each. Variable costs would be only $3 per case because of lower distribution costs. To achieve these cost savings, sales from each smaller plant would be limited to demand within its home state. The total estimated monthly sales volume of 200000 cases in these three Midwestern states is distributed as follows: 80000 cases in Indiana, 70000 cases in Illinois, and 50000 cases in Ohio.