Advertising and New Customers
Component 1 2 3 1 $12 $13 $14 2 $10 $11 $10
Each supplier has a limited capacity in terms of the total number components it can supply. However, as long as Edwards provides sufficient advance orders, each supplier can devote its capacity to component 1, component 2, or any combination of the two compoents, if the total number of units ordered is within its capacity.
Supplier 1 2 3
Capacity 600 1000 800
If the Edwards production plan for the next period …show more content…
The cost of each meter produced at the El Paso plant is $10.50. The San Bernardino plant utilizes newer and more efficient; as a result, manufacturing costs are $.50 per meter less than at the El Paso plant. The company's rapid growth meant that not much attention was paid to the efficiency of the distribution system. Darby's management decided it is now time to address this issue. The cost of shipping a meter from each of the two plants to each of the three distribution centers is shown in Table 1 below. The quarterly production capacity is 30,000 meters at the older El Paso plant and 20,000 meters at the San Bernardino plant. Note that no shipments are allowed from the San Bernardino plant to the Ft. Worth distribution center. The company serves nine customer zones from the three distribution centers. The forecast of the number of meters needed in each customer zone for the next quarter is shown in Table 2.The cost per unit of shipping from each distribution center to each customer zone is given in Table 3. Note that some of the distribution centers cannot serve certain customer zones. In the current distribution system, demand at the Dallas, San Antonio,
Wichita, and Kansas City customer zones is satisfied by shipments from the Ft. Worth distribution center. In a similar manner, the Denver, Salt Lake City, and Phoenix customer zones are served by the Santa Fe distribution, and the Los Angeles and San Diego customer zones