How should production be allocated among the five plants

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Allocating Plant Output A firm owns five manufacturing plants that are responsible for the quarterly production of an industrial solvent. The production process exhibits diseconomies of scale. At plant p, the cost of making x thousand pounds of the solvent is approximated by the quadratic function f(x) ¼ (1/cp)x2 . The parameters cp are plant dependent, as shown in the table

P

1

2

3

4

5

cP

3

6

4

8

5

The quarterly volume requirement is 50,000 pounds.

How should production be allocated among the five plants in order to minimize the total cost of meeting the volume requirement?

Reference no: EM131163544

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