PROBLEM 11Solutions Plus is an industrial chemicals company that produces specialized cleaning fluids andsolvents for a wide variety of applications. Solutions Plus just received an invitation to submit a bid tosupply Great North American railroad with a cleaning fluid for locomotives. Great North Americanneeds the cleaning fluid at 11 locations (railway stations); it provided the following information toSolutions Plus regarding the number of gallons of cleaning fluid required at each location:LocationGallons RequiredSanta AnaEl PasoPendletonHoustonKansas CityLos AngelesGlendaleJacksonvilleLittle RockBridgeportSacramentoSolutions Plus can produce the cleaning fluid at its Cincinnati plant for $1.20 per gallon. Even thoughthe Cincinnati location is its only plant, Solutions Plus has negotiated with an industrial chemicalscompany located in Oakland, California, to produce and ship up to 50,000 gallons of the locomotivecleaning fluid to selected Solutions Plus customer locations. The Oakland company will chargeSolutions Plus $1.65 per gallon to produce the cleaning fluid, but Solutions Plus thinks that the lowershipping costs from Oakland to some customer locations may offset the added cost to produce theproduct.The president of Solutions Plus, Charlie Weaver, contacted several trucking companies to negotiateshipping rates between the two production facilities (Cincinnati and Oakland) and the locations wherethe railroad locomotives are cleaned. The quotes received in terms of dollars per gallon are shownbelow. Note that the "-" entries identify shipping routes that will not be considered because of thelarge distances involved. These quotes for shipping rates are guaranteed for one year.CincinnatiOakland0.220.740.49Santa AnaEl PasoPendletonHoustonKansas CityLos AngelesGlendaleJacksonvilleLittle RockBridgeportSacramento22,4186,80080,290100,447241,57064,76133,68968,486148,586111,475112,0000.840.830.450.360.340.340.340.220.220.15To submit a bid to the railroad company, Solutions Plus must determine the price per gallon they willcharge. Solutions Plus usually sells its cleaning fluids for 15% more than its cost to produce and deliverthe product. For this big contract, however, Fred Roedel, the director of marketing, suggested thatmaybe the company should consider a smaller profit margin. In addition, to ensure that if SolutionsPlus wins the bid, they will have adequate capacity to satisfy existing orders as well as accept ordersfor other new business, the management team decided to limit the number of gallons of thelocomotive cleaning fluid produced in the Cincinnati plant to 500,000 gallons at most.DO NOT SENDSOLUTIONS ANDANSWERS FROMCHEGG ORCOURSEHEROOR DOWNVOTE

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lutions Plus is an industrial chemicals company that produces specialized cleaning fluids and lvents for a wide variety of applications. Solutions Plus just received an invitation to submit a bid to apply Great North American railroad with a cleaning fluid for locomotives. Great North American eeds the cleaning fluid at 11 locations (railway stations); it provided the following information to lutions Plus regarding the number of gallons of cleaning fluid required at each location: Gallons Required Location Santa Ana El Paso Pendleton Houston Kansas City Los Angeles Glendale Jacksonville Little Rock Bridgeport Sacramento 22,418 6,800 80,290 100,447 241,570 64,761 33,689 68,486 148,586 111,475 112,000

lutions Plus is an industrial chemicals company that produces specialized cleaning fluids and lvents for a wide variety of applications. Solutions Plus just received an invitation to submit a bid to apply Great North American railroad with a cleaning fluid for locomotives. Great North American eeds the cleaning fluid at 11 locations (railway stations); it provided the following information to lutions Plus regarding the number of gallons of cleaning fluid required at each location: Gallons Required Location Santa Ana El Paso Pendleton Houston Kansas City Los Angeles Glendale Jacksonville Little Rock Bridgeport Sacramento 22,418 6,800 80,290 100,447 241,570 64,761 33,689 68,486 148,586 111,475 112,000

Computer Networking: A Top-Down Approach (7th Edition)

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Question

PROBLEM 11
Solutions Plus is an industrial chemicals company that produces specialized cleaning fluids and
solvents for a wide variety of applications. Solutions Plus just received an invitation to submit a bid to
supply Great North American railroad with a cleaning fluid for locomotives. Great North American
needs the cleaning fluid at 11 locations (railway stations); it provided the following information to
Solutions Plus regarding the number of gallons of cleaning fluid required at each location:
Location
Gallons Required
Santa Ana
El Paso
Pendleton
Houston
Kansas City
Los Angeles
Glendale
Jacksonville
Little Rock
Bridgeport
Sacramento
Solutions Plus can produce the cleaning fluid at its Cincinnati plant for $1.20 per gallon. Even though
the Cincinnati location is its only plant, Solutions Plus has negotiated with an industrial chemicals
company located in Oakland, California, to produce and ship up to 50,000 gallons of the locomotive
cleaning fluid to selected Solutions Plus customer locations. The Oakland company will charge
Solutions Plus $1.65 per gallon to produce the cleaning fluid, but Solutions Plus thinks that the lower
shipping costs from Oakland to some customer locations may offset the added cost to produce the
product.
The president of Solutions Plus, Charlie Weaver, contacted several trucking companies to negotiate
shipping rates between the two production facilities (Cincinnati and Oakland) and the locations where
the railroad locomotives are cleaned. The quotes received in terms of dollars per gallon are shown
below. Note that the "-" entries identify shipping routes that will not be considered because of the
large distances involved. These quotes for shipping rates are guaranteed for one year.
Cincinnati
Oakland
0.22
0.74
0.49
Santa Ana
El Paso
Pendleton
Houston
Kansas City
Los Angeles
Glendale
Jacksonville
Little Rock
Bridgeport
Sacramento
22,418
6,800
80,290
100,447
241,570
64,761
33,689
68,486
148,586
111,475
112,000
0.84
0.83
0.45
0.36
0.34
0.34
0.34
0.22
0.22
0.15
To submit a bid to the railroad company, Solutions Plus must determine the price per gallon they will
charge. Solutions Plus usually sells its cleaning fluids for 15% more than its cost to produce and deliver
the product. For this big contract, however, Fred Roedel, the director of marketing, suggested that
maybe the company should consider a smaller profit margin. In addition, to ensure that if Solutions
Plus wins the bid, they will have adequate capacity to satisfy existing orders as well as accept orders
for other new business, the management team decided to limit the number of gallons of the
locomotive cleaning fluid produced in the Cincinnati plant to 500,000 gallons at most.
DO NOT SEND
SOLUTIONS AND
ANSWERS FROM
CHEGG OR
COURSEHERO
OR DOWNVOTE

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