Williams Auto Top Carriers currently maintains plants in Atlanta and Tulsa to supply auto top carriers to distribution centers in Los Angeles and New York. Because of expanding demand, Williams has decided to open a third plant and has narrowed the choice to one of two cities—New Orleans and Houston. Table C.3 provides pertinent production and distribution costs as well as plant capacities and distribution demands.

Which of the new locations, in combination with the existing plants and distribution centers, yields a lower cost for the firm?

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TABLE C.3 Production Costs, Distribution Costs, Plant Capabilities, and Market Demands for Williams Auto Top Carriers TO DISTRIBUTION CENTERS LOS FROM PLANTS ANGELES NEW YORK NORMAL PRODUCTION UNIT PRODUCTION COST Existing plants Atlanta $8 $5 600 Tulsa $4 $7 900 $6 $5 Proposed locations New Orleans $5 $6 Houston $4 $6a Forecast demand 800 1,200 500 $4 (anticipated) 500 $3 (anticipated) 2,000 *Indicates distribution cost (shipping, handling, storage) will be $6 per carrier between Houston and New York.