Consolidated Bottling Limited, bottles spring water.

It has distribution centres near 13 cities in

India. They have 10 bottling plants. The locations of these bottling plants and distribution centres
are shown in the following table.
Discussion Question
A new plant would have a capacity 130 thousand cases per month.
1.
2.
3.
4.
5.
6.

What is the present shipping cost (minimized)?

Which plants are having excess capacity?
If you were to minimize total shipping cost, which city would you choose for constructing a
new bottling plant?
What would be the new shipping cost after the construction of this plant?
Which is the next favourable city?
What is the marginal cost increment for the second favourable city?