6. The Hi Sun Chemical Division of a Taiwanese trading company is evaluating potential sites for an additional factory so it can better access the low labor costs and high potential demand of mainland China. The company currently operates factories in the Philippines and Malaysia. Hi Sun has narrowed the selection of a site for the new factory to two potential locations, Shenzhen and Xiamen. The costs of supplying these locations from the company’s existing Asian facilities and the amounts of the available supplies and requirements are given in the following table.

a. By use of the transportation method, compute the lowest cost arrangement for supplying the factories if Shenzhen is selected for the site.

b. Repeat the analysis for Xiamen.

c. Which site will provide the lowest cost, and how much is the cost?

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SOURCE OF MATERIALS Cost ($/Ton) from Source AVAILABLE TONS/YEAR MALAYSIA PHILIPPINES XIAMEN SHENZHEN AT SOURCE Thailand $19 $22 $20 $19 8,000 Korea 28 23 18 20 5,000 Taiwan 16 18 15 17 4,000 Requirements 4,000 6,000 2,000 2,000