Maurice€™s Pump Manufacturing Company currently maintains plants in Atlanta and Tulsa that supply major distribution centers in Los Angeles and New York. Because of an expanding demand, Maurice has decided to open a third plant and has narrowed the choice to one of two cities€”New Orleans or Houston. The pertinent production and distribution costs, as well as the plant capacities and distribution center demands, are shown in the following table.

Which of the new possible plants should be opened?

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DISTRIBUTION CENTERS PRODUCTION COST (PER UNIT) LOS NEW ANGELES YORK PLANTS Atlanta (existing) Tulsa (existing) CAPACITY 600 900 $4 $7 $5 $4 (anticipated) $5 500 ew Orleans (proposed) Houston $4 500 Forecast 800 1,200 Which of the new possible plants should be opened?