In Problem S11-8, the Samuel McGregor Brewing Company management has negotiated a new shipping contract with a trucking firm between its Moncton brewery and its distributor in Ontario that reduces the shipping cost per barrel from $0.80 per barrel to $0.55 per barrel. How will this cost change affect the optimal solution?

Problem S11-8

The Samuel McGregor Brewing Company has breweries in three cities; the breweries can supply the following numbers of barrels of draft beer to the company€™s distributors each month:

Brewery                             Monthly Supply (barrels)
A. Moncton ...................................... 4000
B. Vancouver ................................... 5000
C. Winnipeg ..................................... 3500
....................................................... 12,500

The distributors, spread throughout six provinces, have the following total monthly demand:

Distributor                       Monthly Demand (barrels)
1. Nova Scotia ................................ 1800
2. British Columbia ......................... 2100
3. Quebec ...................................... 1700
4. Manitoba .................................... 1050
5. Ontario ....................................... 2350
6. Saskatchewan ........................... 1400

..................................................... 10,400

The company must pay the following shipping costs per barrel:

to 2 from 3 4 6. $0.50 $0.35 S0.60 $0.45 A. $0.80 $0.75 0.55 0.40 0.25 0.65 B. 0.20 0.65 0.70 0.55 0.35 C. 0.40 0.50 0.50