Heavenly Casket Company Is Trying to Choose Sites for the Production

Essay

Heavenly Casket Company is trying to choose sites for the production of its "mail order" caskets.It is considering plants in Chicago, Dallas, and Atlanta.Finished caskets will then be sent to their two distribution sites in Trenton and Tacoma, which take orders over the internet.Heavenly expects demand of 4000 caskets per year in Trenton and 2500 in Tacoma.The table below gives annual plant capacity, fixed yearly operating expenses, unit production costs, and unit transportation costs between possible plant locations and the distribution sites: $\begin{array}{cccccc}\text { Site } & \text { Capacity } & \begin{array}{c}\text { Fixed } \\\text { Annual } \\\text { Operating } \\\text { Costs }\end{array} & \begin{array}{c}\text { Production } \\\text { Cost Per } \\\text { Unit }\end{array} & \begin{array}{c}\text { Shipping } \\\text { to Trenton }\end{array} & \begin{array}{c}\text { Shipping } \\\text { to Tacoma }\end{array} \\\text { Chicago } & 3500 & \$ 40,000 & \$ 200 & 75 & 50 \\\text { Dallas } & 3200 & \$ 42,000 & \$ 160 & 95 & 70 \\\text { At lanta } & 3700 & \$ 45,000 & \$ 170 & 82 & 98\end{array}$
Which plants should be operational, and what should the production quantities and shipping pattern be to minimize Heavenly's annual expenses?