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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 1 Warehouse 2(in 1000 cars)(in $1000)
Plant 1671618306
Plant 2587824140
Plant 337663188
Plant 4155422164
Annual
Demand 1733
(in 1000 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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