Question
Trudeau Chemicals Inc. has 4 production sites in the province of Quebec. The plants in Valleyfield and Drummondville are the largest, with available capacity of
Trudeau Chemicals Inc. has 4 production sites in the province of Quebec. The plants in Valleyfield and Drummondville are the largest, with available capacity of 1,800 tonnes each. Variable production costs are $25/tonne and $20/tonne respectively. The plants in Trois-Rivires and SainteFoy are smaller, with available capacity of only 800 tonnes each, and higher variable production costs of $40/tonne and $38/tonne respectively. TCI has received a 3,000 tonne order from a customer called Scheer Specialties. Due to quality concerns, Scheer Specialities has requested that no more than 10% of their order be filled from the Drummondville plant, otherwise there are no restrictions on sourcing. TCI pays for the shipping costs to their customers. Freight rates from each plant to the Scheer Specialities location are as follows: Valleyfield - $32/tonne. Drummondville - $28/tonne. Trois-Rivires - $18/tonne. Sainte-Foy - $22/tonne. (a) How many tonnes of product should be produced and shipped from each plant in order to fill the Scheer Specialities order, if TCI wants to minimize total costs (variable production costs plus freight)? (b) What are the total costs to fulfill this order, based on the optimal sourcing plan from (a)? (c) How much total costs could TCI save on filling this order, if the quality issues at Drummondville were resolved and there were no quality restrictions on sourcing
Must be done in excel!!!
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