Question: The management of the Executive Furniture Corporation decided to expand the production capacity at its Des Moines factory and to cut back production at its other factories. It also recognizes a shifting market for its desks and revises the requirements at its three warehouses.

New Warehouse

Requirements New Factory Capacities

Albuquerque (A) 200 desks Des Moines (D) 300 desks

Boston (B) 200 desks Evansville (E) 150 desks

Cleveland (C) 300 desks For Lauderdale (F) 250 desks

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(a) Use the northwest corner rule to establish an initial feasible shipping schedule and calculate its cost.

(b) Use the stepping stone method to test whether an improved solution is possible.

(c) Explain the meaning and implications of an improvement index that is equal to 0. What decisions might management make with this information? Exactly how is the final solution affected?