Dalton Pharmaceuticals enjoys a dominant position in most of Canada with over 800 discount retail outlets. These stores are served by twice-weekly deliveries from Dalton€™s 16 warehouses, which are in turn supplied daily by seven factories that manufacture about 70% of all of the chain€™s products. It is clear to Marilyn Helms, VP operations, that an additional warehouse is desperately needed to handle growth and backlogs. Three cities, Montreal, Toronto, and Winnipeg, are under final consideration. The table below illustrates the current and proposed factory/warehouse capacities/demands and shipping costs per average box of supplies.
a) Based on shipping costs only, which city should be selected for the new warehouse?
b) One study shows that Ottawa€™s capacity can increase to 500 boxes per day. Would this affect your decision in part (a)?
c) Because of a new intraprovincial shipping agreement, rates for shipping from each factory in Ontario to each warehouse in Ontario drop by $1 per carton. How does this factor affect your answer to parts (a) and (b)?

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Warehouse Charlotte town, Capacity (cartons per day) 350 Quebec Yorkton, Calgary, Miramichi, NB Gatineau, QC City, Wellington, Bonavista, NL Factory Saskatoon, SK Ottawa, ON Regina, SK Hamilton, ON Moncton, NB Fredericton, NB Summerside, PEI SK AB QC $3 PE PE $3 4. $5 6. $4 $4 6. $6 $8 $8 5 300 400 3 2 2 1 6. 8. 5 9. 200 5 6. 6. 5 8. 1 4 10 600 2 5 1 6. 6. 400 2 300 500 4 8. 8. 250 150 150 50 100 200 150 Requirements (cartons/day) 50 Warehouse Alternatives Capacity Winnipeg, (cartons per day) 350 Kingston, Windsor, ON Thunder Bay, Bedeque, Tignish, Montreal, Toronto, PE Factory Saskatoon, SK Ottawa, ON MB $3 ON ON PE QC ON $10 $9 $8 2 $8 6. $11 $4 $6 3 9. 2 5 9. 300 400 6. 8. Regina, SK Hamilton, ON Moncton, NB Fredericton, NB Summerside, PE 5 2 3 3 5 3 2 200 5 5 13 9. 8. 2 6. 600 6. 400 6. 2 8. 8. 500 Requirements 250 300 300 150 300 300 300 (cartons/day) 100 2. 50