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A manufacturer of printing inks has five manufacturing plants (US, Germany, Japan, Brazil, India) worldwide. Their locations and capacities are shown in Table 1 along

A manufacturer of printing inks has five manufacturing plants (US, Germany, Japan, Brazil, India) worldwide. Their locations and capacities are shown in Table 1 along with the cost of producing 1 ton of ink at each facility. The production costs are in the local currency of the country where the plant is located. The major markets for the inks are North America, South America, Europe, Japan, and the rest of Asia. Demand at each market is shown in Table 2. Transportation costs from each plant to each market in U.S. dollars are shown in Table 1. Management must come up with a production plan. Anticipated exchange rates are shown in Table 3. One constraint is that no plant can run below 60 percent of capacity.

Table 1: Capacity, Production, and Transportation Costs

Transportation costs (US$)

North

America

South America

Europe

Japan

Asia

Capacity Tons/Year

Production Cost/Ton

United States

600

1,200

1,300

2,000

1,700

185

10,000

US$

Germany

1,300

1,400

600

1,400

1,300

475

15,000

marks

Japan

2,000

2,100

1,400

300

900

50

1,800,000

yen

Brazil

1,200

800

1,400

2,100

2,100

200

13,000

real

India

2,200

2,300

1,300

1,000

800

80

400,000

rupees

Table 2: Demand

North

America

South America

Europe

Japan

Asia

Demand (Tons/Year) 270 190 200 120 100

Table 3: Anticipated Exchange Rates

Currency

US$

US$

1

Mark

0.502

Yen

0.0093

Real

0.562

Rupee

0.023

Determine the low-cost optimal production distribution plan using Excel Solver.

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