Industrial Packaging Solutions (IPS) is a manufacturer of corrugated fiberboard shipping boxes used by companies across the United States. Final products are consolidated on standard shipping pallets of uniform dimensions and weight. Because of this, the cost to ship a pallet to a single destination is the same regardless of the type of box loaded on the pallet. The standard unit for sales and operations planning at IPS is a pallet load.

After recently opening a new factory to satisfy growing demand for their products, IPS is concerned about allocating demand from their customers to the facilities in their production network. They want to do so in a way that minimizes the total cost of supplying final products to their customers.

They currently have three factories that service a network of eight major wholesalers. Relevant data for the next year are shown in the table below.

Factory Location	Prod. Capacity (Pallets x 1,000)	Standard Production Cost (Per pallet)
Denver CO	25	$150
Chicago IL	50	$180
Baltimore MD	35	$175

Customer Location	Demand (Pallets x 1,000)
Spokane WA	8.5
Los Angeles CA	19.6
Kansas City MO	9.3
Minneapolis MN	8.8
Indianapolis IN	11.8
Atlanta GA	13.6
New York NY	17.2
Orlando FL	8.4

Based on contracts with their transportation suppliers, IPS is confident that the following transportation rates will be valid over the next year. Rates provided are to transport one pallet of product. There is no quantity discount given for volume shipments.

	Destination City and Transportation Rates per Pallet ($)
Factory Location	Spokane	L.A.	K.C	Minn.	Indy	Atlanta	N.Y.	Orlando
Denver	42	49	45	54	56	65	70	72
Chicago	65	69	49	38	32	45	50	55
Baltimore	75	77	68	62	43	44	35	38

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