The Stuart Corporation manufactures chairs at four plants located in various parts of the U.S. The cost of manufacture, excluding material, per chair and the minimum and maximum monthly regular and overtime production for each plant is shown in the table below.
Twenty pounds of wood are required to produce each chair. The company obtains its wood from two sources. These sources can supply any amount of raw material, but contractual obligations require the company to buy at least four tons of wood from each supplier. The purchase costs for wood, FOB the source, are: 10 cents per pound from Source 1, and 7.5 cents per pound from Source 2. The shipping cost per pound of wood between each source and plant are shown below.
The chairs are sold in four major cities: new York, Chicago, San Francisco, and Dallas. Transportation costs, in dollars per chair, between the plants and these cities, along with unit selling prices, maximum demands, and minimum chairs to be delivered are as follows.
