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An electronics manufacturer wants to expand its market in Europe. The demand in Europe is forecasted as: England France Spain Germany Italy Sweden 24 32

An electronics manufacturer wants to expand its market in Europe. The demand in Europe is forecasted as:

England

France

Spain

Germany

Italy

Sweden

24

32

28

19

35

27

*in million units

Further analysis shows the variable costs (production, inventory and holding, transportation, tax, and tariffs) of meeting demand from a source to a market per 1,000,000 units:

Demand Region

Production and Transportation Cost per 1,000,000 units

Supply Region

England

France

Spain

Germany

Italy

Sweden

England

150

180

133

169

128

120

France

154

232

190

191

202

72

Spain

227

231

168

174

143

135

Germany

149

115

100

137

116

99

Italy

236

178

122

94

243

226

Sweden

248

73

70

226

246

116

*in thousands of dollars

The company considers two plant sizes in each location. The annualized fixed cost of plants for each location is found to be:

Fixed Cost ($)

Low Capacity

Fixed Cost ($)

High Capacity

England

17,000

20

19,000

35

France

12,000

20

22,000

35

Spain

10,000

20

18,000

35

Germany

9,000

20

15,000

35

Italy

8,000

20

12,000

35

Sweden

9,000

20

16,000

35

*in thousands of dollars

  1. What is the lowest cost achievable for the production and distribution network?
  2. What is the minimum cost configuration (where are the plants located and in what is the capacity of each plant)?
  3. Which plants serve which market in what volume?

NOTE: Please remember to add a constraint that will ensure having either a small capacity or a high capacity facility at a location. To do so, you can add up the binary variables of plant capacity for a location, and set it less than or equal to 1 as the right-hand side value. Please solve by Excel

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