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Problem 5 (5 points) A firm has established a distribution network for the supply of a raw material critical to its manufacturing process. Currently
Problem 5 (5 points) A firm has established a distribution network for the supply of a raw material critical to its manufacturing process. Currently there are two origins for this raw material, which must be shipped to three manufacturing plants. The current network has the following characteristics summarized in the table below. For example, Raw Material Source 1 can supply a maximum of 300 units of raw materials, the demand in Plant 1 is 500 units of raw materials, and the cost to ship one unit of raw materials from Raw Material Source 1 to Plant 1 is $8. Plant 1 Plant 2 Plant 3 SUPPLY Raw Material Source 1 $8 $6 $9 300 units Raw Material Source 2 $3 $7 $4 700 units DEMAND 500 units 500 units 500 units The firm has identified two potential vendors for a third raw material source; these are identified as Candidate A and Candidate B. From A, the costs to ship one unit of raw materials would be $8 to Plant 1, $12 to Plant 2, and $14 to Plant 3. From B, these costs would be $10, $12, and $9. The new source, wherever it is located, will have a capacity of 500 units. As an operations manager, which candidate you would select and why? Use transportation method of linear programming to solve this problem.
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