Question: Best Sell Ltd . has decided to launch a new product in addition to its range of products. The following information is available: 1 .

Best Sell Ltd. has decided to launch a new product in addition to its range of products. The following information is available:
1. The new product may be distributed through any combination of the two company warehouses W1 and W2.
2. The available monthly production capabilities for the new products are:
1000 units at plant A
2000 units at plant B
1000 units at plant C
3. Three major concentration points of customer demand are at locations E, F and G which are estimated to have a monthly demand of:
900 units at E
800 units at F
900 units at G
4. The unit production costs amount to Sh.30, Sh.40, Sh.10 at A, B and C respectively.
5. The unit handling costs at the warehouses amount to Sh.20 and Sh.30 at W1 and W2.
6. The unit transportation costs from plant to warehouse and unit delivery cost from warehouse to customers are as shown below:
Transportation cost schedule.
Warehouses
W1 W2
Plants
A
B
C Sh.
60
50
130 Sh.
60
50
40
Delivery costs schedule
Locations
E F G
Warehouses
A
B Sh.
30
50 Sh.
50
30 Sh.
80
90
Required:
Determine the optimum production and distribution schedule to minimize total cost.
(12 Marks)
(Total: 20 Marks)

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