Both TelecomOne and HighOptic are manufacturers of latest generation of telecommunication equipment. TelecomOne has manufacturing plants located in Baltimore, Memphis, and Wichita. HighOptic has plants located in Cheyenne and Salt Lake City. They serve markets in Atlanta, Chicago, Denver, Omaha, and Portland. Plant capacity (1000 units), market demand (1000 units), variable production and transportation cost per thousand units shipped and fixed costs per month at each plant are shown in following Table.

(1) Before the merger, what is the optimal network for two manufacturers (assume no shut down)? (2)After the merger, what is the optimal network if none of the plants is shut down? (3)After the merger, what is the optimal network if plants can be shut down?

Demand City Supply City Production and Transportation Cost per 1000 Units Fixed costs($) Capacity Atlanta Chicago Denver Omaha Portland Baltimore 1,675 685 1,630 1,160 2,800 7,650 18 TelecomOne Memphis 380 543 1,045 665 2,321 4,100 22 Wichita 922 700 508 311 1,797 2,200 31 Demand 8 12 3 3 5 Cheyenne 1,460 970 100 495 1,200 3,500 24 HighOptic Salt Lake 1,925 1,425 500 950 800 5,000 27 Demand 4 5 4 5 8