Solutions Plus is an industrial chemicals company that produces specialized cleaning ?uids and solvents for a wide variety of applications. Solutions Plus just received an invitation to submit a bid to supply Great North American railroad with a cleaning ?uid for locomotives. Great North American needs the cleaning ?uid at 11 locations (railway stations); it provided the following information to Solutions Plus regarding the number of gallons of cleaning ?uid required at each location (see Table 6.8):

Solutions Plus can produce the cleaning ?uid at its Cincinnati plant for $1.20 per gallon. Even though the Cincinnati location is its only plant, Solutions Plus has negotiated with an industrial chemicals company located in Oakland, California, to produce and ship

up to 50,000 gallons of the locomotive cleaning ?uid to selected Solutions Plus customer

locations. The Oakland company will charge Solutions Plus $1.65 per gallon to produce the cleaning ?uid, but Solutions Plus thinks that the lower shipping costs from Oakland to some customer locations may offset the added cost to produce the product.

TABLE 6.8

Location Gallons Required Location Gallons Required

Santa Ana 22,418 Glendale 33,689

El Paso 6,800 Jacksonville 68,486

Pendleton 80,290 Little Rock 148,586

Houston 100,447 Bridgeport 111,475

Kansas City 241,570 Sacramento 112,000

Los Angeles 64,761

TABLE 6.9 FREIGHT COST ($ PER GALLON)

Cincinnati Oakland

Santa Ana