Question
An appliance retailer, is undergoing massive expansion in Australia. This has put significant pressure on its existing warehouses. As part of the company's long-term strategy,
An appliance retailer, is undergoing massive expansion in Australia. This has put significant pressure on its existing warehouses. As part of the company's long-term strategy, the appliance retailer, is considering opening new warehouses in Melbourne, Sydney, Perth, and Brisbane. Each warehouse, when opened, can ship up to 135 units of appliance per week, and for economies of scale, there is a minimum shipping quantity of 20 units from each opened warehouse. The weekly fixed cost for keeping each warehouse open is $500 for Melbourne, $600 for Sydney, $400 for Perth, and $350 for Brisbane. Region 1 of the country requires 100 units per week, region 2 requires 85 units per week, and region 3 requires 60 units per week. The costs (including production and shipping costs) of sending one unit from a plant to a region are shown below.
Region 1 Region 2 Region 3 Melbourne $29 $46 $55 Sydney $52 $19 $30 Perth $30 $38 $21 3 Brisbane $28 $54 $39Step by Step Solution
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