Assignment 1
Question 5-4
**Refer to excel sheet Question 5-4 for all the calculations according to the respective question parts.
This is a cost minimization problem, thus the target is to achieve the lowest cost possible. The constraints in all parts of a, b, c, and d are the same. We had to ensure that the unused capacity unit was a positive number and the unmet demand must remain at zero. For parts C and D, an additional constraint and an assumption were made; the assumption is that per-merger scaling back and shutdown are possible. The additional constraint of “only one choice” can be determined from the 3 plant operation options: keep current capacity, scale back capacity, or shut down the plant. In Part D, there is no duty fee charge.
Part A
Sleekfon has three production facilities in Europe, North America and South America. Their lowest achievable cost for the production and distribution network prior to the merger is $564.39 million per year; with $260 million per year for fixed cost and $304.39 million for variable costs and import duty fees. The European market will be provided with 20 million units per year by the European facility. The facility in North America will provide to the following market: 10 million units per year to the North American market, 3 million units per year to the non-European market in Europe, 2 million units per year to the market in Japan, 1 million units per year to the African market, and 2 million units per year to the markets in rest of Asia and Australia. There will be 2 million units unused capacity at the North American facility each year. Finally, the South American facility will only provide to its own market with 4 million units and 6 million unused units each year.
Sturdyfon has three production facilities in Europe, North America and Rest of Asia. Their lowest achievable production and distribution network cost prior to the merger is $512.68 million per year; with $250 million per year for fixed cost and $262.68
**Refer to excel sheet Question 5-4 for all the calculations according to the respective question parts.
This is a cost minimization problem, thus the target is to achieve the lowest cost possible. The constraints in all parts of a, b, c, and d are the same. We had to ensure that the unused capacity unit was a positive number and the unmet demand must remain at zero. For parts C and D, an additional constraint and an assumption were made; the assumption is that per-merger scaling back and shutdown are possible. The additional constraint of “only one choice” can be determined from the 3 plant operation options: keep current capacity, scale back capacity, or shut down the plant. In Part D, there is no duty fee charge.
Part A
Sleekfon has three production facilities in Europe, North America and South America. Their lowest achievable cost for the production and distribution network prior to the merger is $564.39 million per year; with $260 million per year for fixed cost and $304.39 million for variable costs and import duty fees. The European market will be provided with 20 million units per year by the European facility. The facility in North America will provide to the following market: 10 million units per year to the North American market, 3 million units per year to the non-European market in Europe, 2 million units per year to the market in Japan, 1 million units per year to the African market, and 2 million units per year to the markets in rest of Asia and Australia. There will be 2 million units unused capacity at the North American facility each year. Finally, the South American facility will only provide to its own market with 4 million units and 6 million unused units each year.
Sturdyfon has three production facilities in Europe, North America and Rest of Asia. Their lowest achievable production and distribution network cost prior to the merger is $512.68 million per year; with $250 million per year for fixed cost and $262.68