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A company has two alkylate plants, A1 and A2, from which a given product is distributed to customers C1, C2, and C3. The transportation costs are given as follows: Plants Customer A1 A1 A1 A₂ A2 A₂ C1 C2 C3 C1 C2 C3 Cost ($/ton) 25 60 75 20 50 85 The maximum refinery production rates and minimum customer demand rates are as follows: Customer/plant Rate, tons/day A1 A₂ C1 C2 C3 1.6 0.8 0.9 0.7 0.3 The cost of production for A₁ is $30/ton for production levels less than 0.5 ton/day; for production greater than 0.5 ton/day, the production cost is $40/ton. The production cost of A2 is uniform at $35/ton. Find the optimum distribution policy to minimize the company's total costs.

A company has two alkylate plants, A1 and A2, from which a given product is distributed to customers C1, C2, and C3. The transportation costs are given as follows: Plants Customer A1 A1 A1 A₂ A2 A₂ C1 C2 C3 C1 C2 C3 Cost ($/ton) 25 60 75 20 50 85 The maximum refinery production rates and minimum customer demand rates are as follows: Customer/plant Rate, tons/day A1 A₂ C1 C2 C3 1.6 0.8 0.9 0.7 0.3 The cost of production for A₁ is $30/ton for production levels less than 0.5 ton/day; for production greater than 0.5 ton/day, the production cost is $40/ton. The production cost of A2 is uniform at $35/ton. Find the optimum distribution policy to minimize the company's total costs.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...
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A company has two alkylate plants, A1 and A2, from which a given product is distributed to customers C1, C2, and C3. The transportation costs are given as follows: Plants Customer A1 A1 A1 A₂ A2 A₂ C1 C2 C3 C1 C2 C3 Cost ($/ton) 25 60 75 20 50 85 The maximum refinery production rates and minimum customer demand rates are as follows: Customer/plant Rate, tons/day A1 A₂ C1 C2 C3 1.6 0.8 0.9 0.7 0.3 The cost of production for A₁ is $30/ton for production levels less than 0.5 ton/day; for production greater than 0.5 ton/day, the production cost is $40/ton. The production cost of A2 is uniform at $35/ton. Find the optimum distribution policy to minimize the company's total costs.
Transcribed Image Text:A company has two alkylate plants, A1 and A2, from which a given product is distributed to customers C1, C2, and C3. The transportation costs are given as follows: Plants Customer A1 A1 A1 A₂ A2 A₂ C1 C2 C3 C1 C2 C3 Cost ($/ton) 25 60 75 20 50 85 The maximum refinery production rates and minimum customer demand rates are as follows: Customer/plant Rate, tons/day A1 A₂ C1 C2 C3 1.6 0.8 0.9 0.7 0.3 The cost of production for A₁ is $30/ton for production levels less than 0.5 ton/day; for production greater than 0.5 ton/day, the production cost is $40/ton. The production cost of A2 is uniform at $35/ton. Find the optimum distribution policy to minimize the company's total costs.
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