DryIce Inc., is a manufacturer of air conditioners that has seen its demand grow significantly. The company
Question:
DryIce Inc., is a manufacturer of air conditioners that has seen its demand grow significantly. The company anticipates nationwide demand for the next year to be 180,000 units in the South, 120,000 units in the Midwest, 110,000 units in the East, and 100,000 units in the West. Managers at DryIce are designing the manufacturing network and have selected four potential sites- New York, Atlanta, Chicago, and San Diego. Plants could have the capacity of either 200,000 or 400,000 units. The annual fixed costs at the four locations are shown in the table below, along with the cost of producing and shipping an air conditioner to each of the four markets. Where should DryIce build its factories and how large should they be?
Production and transport costs for DryIce Inc.
Demand Region
| Supply City | East | South | Midwest | West |
|---|---|---|---|---|
| New York | $211 | $232 | $240 | $300 |
| Atlanta | $232 | $212 | $230 | $280 |
| Chicago | $238 | $230 | $215 | $270 |
| San Diego | $299 | $280 | $270 | $225 |
| Demand | 110,000 | 180,000 | 120,000 | 100,000 |
Plant Option
| Capacity | Fixed Cost | Capacity | Fixed Cost | |
|---|---|---|---|---|
| 200,000 | $6,000,000 | 400,000 | $10,000,000 | |
| 200,000 | $5,500,000 | 400,000 | $9,200,000 | |
| 200,000 | $5,600,000 | 400,000 | $9,300,000 | |
| 200,000 | $6,100,000 | 400,000 | $10,200,000 | |
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Expert Answer:
