Ashley’s Auto Top Carriers currently maintains plants in Atlanta and Tulsa that supply major distribution centers in Los Angeles and New York. Because of an expanding demand, Ashley 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 demands, are shown in the table on this page.

Which of the new possible plants should be opened?

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Data for Problem 9-18 TO DISTRIBUTION FROM CENTERS LOS ANGELES NEW YORK NORMAL PRODUCTION PLANTS UNIT PRODUCTION COST ($) ATLANTA $8 $5 600 6 Existing plants TULSA $4 $7 900 5 NEW ORLEANS $5 $6 500 Proposed locations 4 (anticipated) HOUSTON $4 ($6 500 3 (anticipated) FORECAST DEMAND 800 1,200 2,000 Indicates distribution cost (shipping, handling, storage) will be $6 per carrier if sent from Houston to New York