Question
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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