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Which location would result in the lowest total cost

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A shrimp farms owner in Pontian, Johor, Malaysia is seeking a fifth farm location to meet the increasing demand for shrimp. There are three potential locations: Batu Pahat, Kukup, and Tanjong Piai, all three located along the coast of the state of Johor. Batu Pahat would involve a fixed cost of RM2,000 per month and a variable cost of RM4 per kilogram (kg); Kukup would involve a fixed cost of RM2,500 per month and a variable cost of RM3 per kg; and Tanjong Piai would involve a fixed cost of RM3,000 per month and a variable cost of RM3.50 per kg. Use of Batu Pahat location would increase the system transportation costs by RM21,000 per month, Kukup by RM17,000 per month, and Tanjong Piai by RM16,000 per month. Which location would result in the lowest total cost to handle 4000 kg of shrimp per month? Show by calculation.

Note: Calculation can be handwritten clearly on a blank sheet of A4 paper.

Reference no: EM132746110

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