XYZ has three supply chain locations with respective production capacities of an electronic component (Denver,Milwaukee,and Columbia)and three demand locations with their respective demand requirements for that electronic component.The demand requirements,production capacities,and the per-unit transportation costs are tabled in the transportation matrix shown here.Determine the initial shipping cost using the northwest corner rule.

A)$30,000
B)$40,000
C)$24,000
D)$34,000

Question

XYZ has three supply chain locations with respective production capacities of an electronic component (Denver,Milwaukee,and Columbia) and three demand locations with their respective demand requirements for that electronic component.The demand requirements,production capacities,and the per-unit transportation costs are tabled in the transportation matrix shown here.Determine the initial shipping cost using the northwest corner rule.

A)$30,000 
B)$40,000 
C)$24,000 
D)$34,000

Quizplus · Accepted Answer

Using the northwest corner rule, we start allocating shipments from the top left corner and move downwards and rightwards until we meet the total demand or production capacity. The allocation and cost calculation are shown in the table:

|    | Denver | Milwaukee | Columbia | Supply |
|----|--------|-----------|----------|--------|
| A  | 9      | 0         | 0        | 20     |
| B  | 11     | 40        | 0        | 50     |
| C  | 0      | 10        | 30       | 30     |
| Demand | 20 | 50        | 30       |        |
| Cost   | 3      | 2         | 4        |        |

The total shipping cost is the sum of the products of allocated quantities and per-unit transportation costs, which is:

9(3) + 11(3) + 10(2) + 40(2) + 30(4) = $24,000

Therefore, the correct answer is C: $24,000.

XYZ Has Three Supply Chain Locations with Respective Production Capacities