Meg Bishop, vice president of supply chain at the Lilly Snack Company (see Problem 5-19) has been able to secure shipping from the proposed plant in Brevard to its plants in Wise and Cleveland for $6 and $5 per pallet, respectively. If Lilly chooses to place a new plant in Brevard, what would be the new shipping plan and cost? Ignore part (b) of Problem 5-19 in answering this question.
Problem 5-19
The Lilly Snack Company is considering adding an additional plant to its three existing facilities in Wise, Virginia; Humbolt, Tennessee; and Cleveland, Georgia to serve three large markets in the Southeast. Two locations—Brevard, North Carolina, and Laurens, South Carolina—are being considered. The transportation costs per pallet are shown in the table at the top of the next page. (a) Which site would you recommend? Why? (b) Suppose that the Brevard location has been selected. Due to the perishable nature of the goods involved, management wishes to restrict the maximum number of pallets shipped from any one plant to any single market. To accomplish this, management is willing to accept a 10% surcharge on their optimal transportation costs from part (a). What is the new transportation plan, and what is the new cost?
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