a. Form the data tables including the total variable costs, fixed costs, demands, and capacities for each product.

b. What is the annual cost of serving the entire nation from City Q?

X=55

 

2. A wipe company was founded in 1990s and produces currently 2 types of products: B and D. Annual demand for the products was as shown in Table 2.1. At that time, the company had one factory in City Q that produces both products for the entire country. Product B line in City Q facility had an annual capacity of 5,000 thousand (5 million) units, an annualized fixed cost of $5,000 thousands a year, and a variable cost of $10 per unit. Product D line in City Q had an annual capacity of 1,400 thousand units, an annualized fixed cost of $1,500 thousands a year, and a variable cost of $20 per unit. The transportation costs per unit are shown in Table 2.2. City Q NJ AT LA Table 2.2 NW SW UM LM NE SE 6.X 6.32 3.68 4.04 5.76 5.96 6.60 6.X 5.76 5.92 3.68 4.X 6.72 6.48 5.X 4.08 4.X 3.64 4.36 3.68 6.32 6.X 6.72 6.60 Zone NW SW UM LM NE SE Table 2.1 Product B Demand 500 700 900 800 1000 600 Product D Demand 50 90 120 65 120 10*X Management had identified cities NJ, AT, and LA as potential sites for new facilities. Each new plant could have a Product B line, a product D line, or both. A new Product B line had an annual capacity of 2,000 thousand units, an annual fixed cost of $2,200 thousand, and a variable production cost of $11 per unit. A new Product D line had an annual capacity of 1,000 thousand units, an annual fixed cost of $1,500 thousand, and a variable production cost of $19 per unit. Management had to decide whether to build a new plant and if so, which production lines to put into the new plant. (30 points)