Analysis:
Best chip has the capacity to produce 20000 units per year with any of the new site they acquire; Best chip should choose the site, which has lowest cost to purchase and minimum shipping cost. The minimum purchase price for the production facility is St George however;it also has the highest shipping cost. The lowest shipping cost is 31 for two sites, which are Yuma and Fresno and the purchase price for these two sites are 125000 and 130000. Best chip should choose the site with lowest shipping cost because the purchasing cost is a onetime cost, however the shipping cost is variable and it increases with the increase in the production of the company. Best chip should choose Yuma, AZ as it has the lowest shipping cost and also the lowest purchase price among all low shipping cost sites.
The production capacity of site is 20000 and the demand for the year is 27000. Best chip would have to choose which companies they want to supply the products. Best chip should choose the companies with the lowest distance from their site so that they can reduce the expense of shipping cost to the customers. The first 20000 products should be sold to the companies within closest range and then the companies that are far should be prioritized.......................
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