(Solution) - The central purchasing group for Ortega Foods buys cornmeal for -(2025 Original AI-Free Solution)

Paper Details

The central purchasing group for Ortega Foods buys cornmeal for the company's four plants that produce taco shells. Three source points are available, but contractual agreements limit supply from some of the sources. The cornmeal is shipped in 100-lb bags. Data on plant requirements, supply availability, and f.o.b. prices for a typical week are shown in Table 10-6. The transportation rates (in $/cwt.) between the various sources and plants are as follows:

The purchasing group currently supplies Cincinnati and Baltimore plants from Dayton. Dallas is served by Kansas City, and Los Angeles is served by Minneapolis.
(a) What sourcing plan would be best for Ortega, and how much would it save?
(b) Are there any actions that the purchasing group might pursue to reduce costs further?
Table 10-6 Supply and Demand Data for Ortega Food Problem
c. Is Ortega contracting with too many suppliers? Why or why not?