Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 1 Wile E. lCoyote has placed an order for 30 tons of TNT from Acme Enterprises. Acme can manufacture TNT using raw materials (2}

image text in transcribed
image text in transcribed
Problem 1 Wile E. lCoyote has placed an order for 30 tons of TNT from Acme Enterprises. Acme can manufacture TNT using raw materials (2} found in a remote underground mine. Acme needs 3 tons of Z to produce 1 ton of TNT and they are deciding where to locate their factory in order to minimize transportation costs. The mine and Wile E. Coyote's house are 50 miles apart. By train, the cost of shipping both TNT and Z is $2 per ton per mile. However, Acme faces an additional cost because a river passes between the mine and the Wile E. Coyote's house, and the river has no bridge. TNT must be loaded onto barges to cross the river, which is located 15 miles from the mine. Barge operators charge 51 perton of TNT shipped across the river. However, since the raw material 2 is highly explosive when mixed with water, barge operators charge Acme $195 to ship one ton of 2 across the river. Using the above information, nd the transport-cost-minimizing location for Acme's TNT factory. The answer can be found by computing transport costs at four locations: the mine, Wile E. lCovote's house, the mine side of the river, and Wile E. Coyote's side of river. Assume that the width of the river is negligible, so that it can be ignored. Show yourwork. Provide an intuitive explanation for your

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics

Authors: David Colander

7th Edition

0073402869, 9780073402864

More Books

Students also viewed these Economics questions

Question

How vertically integrated should an operations supply network be?

Answered: 1 week ago

Question

8. What are the costs of collecting the information?

Answered: 1 week ago

Question

1. Build trust and share information with others.

Answered: 1 week ago