Question: A firm is seeking a fourth warehouse location to complement three existing warehouses. There are three potential locations: Charlotte, NC; Atlanta, GA; and Columbia, SC.

A firm is seeking a fourth warehouse location to complement three existing warehouses. There are three potential locations: Charlotte, NC; Atlanta, GA; and Columbia, SC. Charlotte would involve a fixed cost of $4,000 per month and a variable cost of $4 per unit;Atlanta would involve a fixed cost of $3,500 per month and a variable cost of $5 per unit; and Columbia would involve a fixed cost of $5,000 per month and a variable cost of $6 per unit. Use of the Charlotte location would increase system transportation costs by $19,000 per month, Atlanta by $22,000 per month, and Columbia by $18,000 per month. The dealer needs to know which location would result in the lowest total cost to handle 800 units per month. To answer the question, computation shows the following results: ____.

A.

Charlotte: $29,000, Atlanta: $21,800, Columbia: $20,750. Therefore go for Columbia.

B.

Charlotte: $26,200, Atlanta: $29,500, Columbia: $27,800. Therefore go for Charlotte.

C.

Charlotte: $29,000, Atlanta: $19,900, Columbia: $28,655. Therefore go for Atlanta.

D.

Charlotte: $21,800, Atlanta: $27,000, Columbia: $19,900. Therefore go for Columbia.

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