ITPEC IP October 2023 Question 69
ITPEC IP October 2023 — Question 69 of 100
The minimum total shipment cost is 11,000 dollars. Warehouse B is cheaper for both stores, but its 15 items create a larger saving when sent to C: compared with A, the saving is 200 dollars per item for C and 100 dollars for D. Therefore send all 15 items from B to C. C's remaining 5 items and all 30 items for D come from A.
Cost: 15 × 200 + 5 × 400 + 30 × 200 = 3,000 + 2,000 + 6,000 = 11,000.
Answer (c)
Why not others:
- The other totals result from a non-optimal allocation or violate supply and demand quantities
Key rule: Allocate limited low-cost capacity where its savings relative to the alternative route are greatest.
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