Example of Two Interconnected Transportation Models:
Consolidated Mining, Inc.

Consolidated Mining Company mines zinc ore at two locations: Blue Mesa (New Mexico) and Dry Pass (Washington state). Once mined, each ton of ore must be moved to one of two processing plants, one near Boise (Idaho), and the other in West Texas. The processed ore is then shipped to three customers, Galvanic Industries, MunchCo, and American Metals. These customers require 600, 400, and 700 tons per day of processed ore, respectively.

Blue Mesa can produce up to 800 tons of ore per day at a cost of $12/ton. Dry pass can produce up to 1000 tons of ore per day at a cost of $10/ton.

The Boise plant can process up to 1000 tons of ore per day at a cost of $17/ton. The West Texas plant can handle up to 700 tons per day at $15/ton.

Shipping costs per ton between the mines, plants, and customers are given in the following two tables:

  Shipping Cost To
From Mine Boise West TX
Blue Mesa $ 4.50 $ 3.00
Dry Pass $ 3.50 $ 6.00

  Shipping Cost From
To Customer Boise West TX
Galvanic $ 2.25 $ 5.75
MunchCo $ 3.35 $ 2.95
American Metals $ 6.00 $ 7.10

What pattern of production, processing, and shipping will allow the firm to meet customer demands at the lowest possible cost?