The Heartland Produce Company owns farms in the Midwest, where it grows and harvests potatoes. It then ships these potatoes to three processing plants in St. Louis, New Orleans, and Chicago, where different varieties of potato products, including potato chips, are produced. The company is experiencing increased demand, so it wants to buy one or more new farms to produce more potato products. The company is considering six new farms with the following annual fixed costs and projected harvest:

The company currently has the following additional available production capacity (tons) at its three plants, which it wants to utilize:
Available Capacity
Plant (thousands of tons)
St. Louis ......... 12
Dallas .......... 10
Chicago .......... 14
The shipping costs ($) per ton from the farms being considered for purchase to the plants are as follows:

Which of the six farms should the company purchase to meet available production capacity at the minimum total cost (including annual fixed costs and shippingcosts)?

  • CreatedApril 10, 2014
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