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Question
The company would like to choose one of the two existing regional warehouses as the centralized warehouse. The inbound and outbound transportation costs under the current distribution system are provided in Table 2. Finally, Table 3 provides information about inbound and outbound transportation costs between the existing regional warehouses and the other market areas if a particular regional warehouse were to become the centralized warehouse. Table 2 - Inbound and Outbound Per-Unit Transportation Costs for the Current Decentralized System Warehouse Inbound Outbound 1 $15 $10 2 $14 $12 Table 3 - Outbound Transportation Costs Per Unit for the Centralized System Warehouse Market 1 Market 2 1 $10 $14 2 $16 $12 Please determine which regional warehouse is more economically justified to be used as the centralized warehouse?
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