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Nortex Chemicals, Inc. is involved in the natural gas processing industry in the Texas Panhandle. One of its primary operations involves purchasing large tanks,
Nortex Chemicals, Inc. is involved in the natural gas processing industry in the Texas Panhandle. One of its primary operations involves purchasing large tanks, each roughly the size of a rail car, of particular byproducts from natural gas processing. It further purifies these byproducts into a usable form, and then resells the tanks to industrial customers. Presently, Nortex is in possession of 12 tanks in Canadian, 15 tanks in Spearman, and 14 tanks in Vega. Each tank must be shipped by truck to one of its processing centers, which are located in Dalhart, Pampa, and Canyon, for further refinement. The cost of shipment depends roughly on distance, but also takes into account the driver's salary (which is higher for routes that are difficult to navigate in a truck), the cost of fuel, and hazardous materials permit fees. The following table provides the total costs (in dollars) of shipping one tank from the suppliers to the processing centers. Dalhart Canadian 292 Pampa 207 Canyon 365 Spearman Vega 266 286 329 226 265 241 While the three processing centers are capable of processing any number of tanks, the number transported to Dalhart must equal the number transported to Pampa, due to an existing agreement between Nortex and its transportation provider. After processing, the tanks will be shipped to customers in Stratford, Stinnett, Perryton, Claude, Hereford, and Channing. The cost of shipment depends on metrics similar to those mentioned above. The following table provides the total costs (in dollars) of shipping one tank from the processing centers to the customers. Note that certain combinations of processing facilities and customers are not possible due to factors such as regional non-compete clauses; these are indicated by dashes. Stratford Stinnett Perryton Claude Hereford Channing Dalhart Pampa Canyon 66 105 103 150 281 193 178 299 159 99 82 134 The current customer demands are: Stratford, 8 tanks; Stinnett, 10; Perryton, 5; Claude, 9; Hereford, 6; and Channing, 8. Additionally, due to a competitor's bankruptcy, Nortex will be acquiring 7 tanks of processed byproducts that are currently located at a yard in Gruver. Because these tanks are already processed, a third-party company can ship these tanks directly to customers in Stratford (at a cost of $284 per tank), Stinnett (at a cost of $262 per tank), and Perryton (at a cost of $247 per tank) without needing to go through one of the processing centers.
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