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Klein Chemicals, Inc., produces a special oil-based material that is currently in short supply. Four of Klein's customers have already placed orders that together
Klein Chemicals, Inc., produces a special oil-based material that is currently in short supply. Four of Klein's customers have already placed orders that together exceed the combined capacity of Klein's two plants. Klein's management faces the problem of deciding how many units it should supply to each customer. Because the four customers are in different industries, different prices can be charged because of the various industry pricing structures. However, slightly different production costs at the two plants and varying transportation costs between the plants and customers make a "sell to the highest bidder" strategy unacceptable. After considering price, production costs, and transportation costs, Klein established the following profit per unit for each plant-customer alternative. Plant Customer 2 3 4 D1 D2 D3 D4 1 Clifton Springs $32 $34 $32 $40 Danville $34 $30 $28 $38 The plant capacities and customer orders are as follows. Plant Capacity (units) Distributor Orders (units) Clifton Springs 5,000 D1 2,000 Danville 3,000 D2 5,000 D3 3,000 D4 2,000
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