Reference no: EM132104472
The Sentry Lock Corporation manufacturers a popular commercial security lock at plants in Macon, Louisville, Detroit and Pheonix. The per unit cost of production at each plant is $35.50, $37.50, $39.00, and $36.25, respectively, and the annual production capacity at each plant is 18,000, 15,000, 25,000, and 20,000, respectively. Sentry’s locks are sold to retailers through wholesale distributors in seven cities across the United States. The unit cost of shipping from each plant to each distributor is summarized in the following table along with the forecasted demand from each distributor for the coming year. Unit Shipping Cost to Distributor in Tacoma San Diego Dallas Denver St. Louis Tampa Baltimore Macon $2.50 $2.75 $1.75 $2.00 $2.10 $1.80 $1.65 Louisville $1.85 $1.90 $1.50 $1.60 $1.00 $1.90 $1.85 Detroit $2.30 $2.25 $1.85 $1.25 $1.50 $2.25 $2.00 Phoenix $1.90 $0.90 $1.60 $1.75 $2.00 $2.50 $2.65 Demand 8,500 14,500 13,500 12,600 18,000 15,000 9,000 Sentry wants to determine the least expensive way of manufacturing and shipping locks from their plants to the distributor. Because the total demand from distributors exceeds the total production capacity of all plants, Sentry realized it will not be able to satisfy all the demand for its product, but wants to make sure each distributor will have the opportunity to fill at least 80% of the orders they receive. Let us suppose that the company operates optimally, what is the total cost incurred?
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