8. Computers Unlimited sells microcomputers to universities and colleges and ships them from three distribution warehouses. The firm is able to supply the following numbers of microcomputers to the universities by the beginning of the academic year:

Distribution Supply

Warehouses (Microcomputers)

1. Cebu 420

2. Bacolod 610

3. Dumaguete 340

Total1,370

Four universities have ordered microcomputers that must be delivered and installed by the beginning of the academic year:

Demand

University (Microcomputers)

A. University of Visayas 520

B. University of Bacolod 250

C. Dumaguete University 400

D. Cebu University 380

1,550

The shipping and installation costs per microcomputer from each distributor to each university are as follows:

To (cost)

From A B C D

1 22 17 30 18

2 15 35 20 25

3 28 21 16 14

Solve this problem by using the computer.

9. In Problem 8, Computers Unlimited wants to better meet demand at the four universities it sup-plies. It is considering two alternatives: (1) expand its warehouse at Cebu to a capacity of 600, at a cost equivalent to an additional 6 in handling and shipping per unit; or (2) purchase a new warehouse in Cagayan that can supply 300 units with shipping costs of 19 to University of Visayas, 26 to University of Bacolod, 22 to Dumaguete University, and 16 to Cebu University. Which alternative should management select, based solely on transportation costs (i.e., no capital costs)?

10. Computers Unlimited in Problem 8 has determined that when it is unable to meet the demand for microcomputers at the universities it supplies, the universities tend to purchase microcomputers elsewhere in the future. Thus, the firm has estimated a shortage cost for each microcomputer demanded but not supplied that reflects the loss of future sales and goodwill. These costs for each university are as follows:

University Cost/Microcomputer

A. University of Visayas 40

B. University of Bacolod 65

C. Dumaguete University 25

D. Cebu University 50

Solve Problem 8 with these shortage costs included. Compute the total transportation cost and the total shortage cost.