Before COVID-19, a cafe in Malaysia used to be frequented by tourists from Singapore due to the uniqueness of the drinks served. The cafe sold standard drinks such as hot/iced coffee, variety of teas, and fresh fruit smoothies, as well as seasonal drinks such as durian latte and mandarin orange milk tea.

(a) The cafe owner is considering to buy from two domestic milk suppliers to ensure the quality of perishable materials. These two suppliers have the same production cost but different transport cost as shown in the figure below. Explain whether the cafe owner should buy the milk from Supplier A or B, if the cafe is located 20 km from Supplier A. Why?

State any assumptions made in your answer.

35 km

(13 marks) Page 2 of 4

Supplier - A

Supplier - B

Production = $2/litre Transport = $0.20/litre/km

Production = $2/litre Transport = $0.30/litre/km

(b) Examine three (3) main factors that you think should be considered when scheduling the transport of various goods (e.g., supplies, food, beverages, etc) from different suppliers to the cafe. Provide reasons to justify why these factors should be taken into consideration.

(12 marks)