1 Evaluate the cost associated with the way Applichem's plant capacity is currently being used. Applichem management is faced with the difficult problem of allocating to its customers the capacity of manufactur- ing plants that are located around the world. Management has long recognized that the manufacturing plants differ greatly in efficiency but has had little success in improving the operations of the ineffi- cient plants. At this time, management has decided to focus on how best to use the capacity of its plants given the differences in manu- facturing costs that currently exist. They recognize that this study may result in the significant reduction of output or possibly the shut- ting down of one or more of the existing plants. Applichem makes a product called Release-case. Plastics mold- ing manufacturers use this chemical product. Plastic parts are made by injecting hot plastic into a mold made in the shape of the part. After the plastic has sufficiently cooled, the fresh part is removed from the mold and the mold is then reused to make subsequent parts. Release-case is a dry powder, applied as part of the manufac- turing process, that makes it easy to remove the part from the mold. Applichem has made the product since the early 1950s, and demand has been consistent over time. A recent study by Applichem's market research team has indicated that demand for Release-case should be fairly steady for the next five years. Although Applichem does have some competition, particularly in the European markets, management feels that as long as they can provide a quality product at a competitive cost, customers should stick with Applichem. Release-case sells at an average price of $1.00 per pound.