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The Special Motors Corporation ( SMC ) specializes in the production of a single type of car. SMC currently has four plants that manufacture and
The Special Motors Corporation SMC specializes in the production of a single type of car. SMC currently has four plants that manufacture and assemble the cars and then distribute them to two warehouses for subsequent distribution to individual dealers The relevant information is summarized in the table below:
Unit transportation Anual Production Annual Fixed
costs in dollars Capacity Operating Cost
Warehouse Warehouse in carsin $
Plant
Plant
Plant
Plant
Annual
Demand
in cars
The top management of SMC feels that closing of one or more plants would reduce fixed operating costs by more than the resulting increase in transportation costs from the remaining plants to the warehouses. Therefore, you have been asked to study the issue.
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