1. You manufacture and sell widgets in two locations, one in Mexico and another USA. The fixed and variable costs, the capacity, and the demand in Mexico and USA respectively, are given below. How would you allocate the demand? Location Demand Capacity Fixed Variable Transp. Transp. (in thou- Cost Cost Cost Cost sands) (MX) (USA) Mexico 4 15 30 4 1 2 USA 8 8 35 5 3 0.5 2. How would the allocation change if there is a duty that is placed on the widgets imported from Mexico to USA. Does the presence of a reciprocal duty change the choices? 3. Your demand forecast is probably very very wrong. How does it change your choices? Can you quantify this? 4. Can you calculate the shadow price of capacity in the US and Mexico plant? 5. If you expect the demand to increase 5% per year in US, and 10% per year in mexico, how will you factor that into your decision calculus? 1. You manufacture and sell widgets in two locations, one in Mexico and another USA. The fixed and variable costs, the capacity, and the demand in Mexico and USA respectively, are given below. How would you allocate the demand? Location Demand Capacity Fixed Variable Transp. Transp. (in thou- Cost Cost Cost Cost sands) (MX) (USA) Mexico 4 15 30 4 1 2 USA 8 8 35 5 3 0.5 2. How would the allocation change if there is a duty that is placed on the widgets imported from Mexico to USA. Does the presence of a reciprocal duty change the choices? 3. Your demand forecast is probably very very wrong. How does it change your choices? Can you quantify this? 4. Can you calculate the shadow price of capacity in the US and Mexico plant? 5. If you expect the demand to increase 5% per year in US, and 10% per year in mexico, how will you factor that into your decision calculus