Oh, no! Computers Unlimited lost the lease on their warehouse in Atlanta and had to lease a new warehouse that holds only 600 microcomputers. The universities' demand is unchanged: Northeastern needs 520, Tech needs 240, State needs 400, and Southeastern needs 380 units. Computers Unlmited wants to better meet demand after the loss of the space in Atlanta. It is considering two alternatives. Alternative 1: Lease a different warehouse in Richmond with a capacity of 600 at a cost equivalent of an additional $2 in shipping per unit. Note: Supply is less than demand here so they will ship everything supplied, but the universities will receive less than what they demanded. Alternative 2: Purchase a new warehouse in Charlotte that can supply 300 units with shipping costs of $20 to Northeastern, $27 to Tech, $23 to State, and $17 to Southeastern. Which alternative should management select? Why? Note: Supply is greater than demand here so they will not ship all of their supplies, but the universities will receive all that they demand.
Universities
Warehouse NE Tech State SE Supply Shipped
Richmond 600
Atlanta 600
DC 310
Demand 520 240 400 380
Received
Total Cost:
Universities
Warehouses Northeastern Tech State Southeastern
Richmond $24 $19 $32 $20
Atlanta $15 $35 $20 $25
DC $28 $21 $16 $14