Because of increasing global demand for its fiber optics products, Hanover Inc. is currently facing a decision on how to increase its production capacity. Hanover has three fiber optic products denoted by FA, FB, and FC. Hanover has two existing plants in Austin, Texas and Paris, France. Hanover plans to keep the Austin and Paris plants will open, but the production capacity at these two existing plants can be changed from their current levels (600,000 units per year). Each plant can make any mix of the three products. Seven locations are being considered for an additional new plant. These consist of two cities in the United States (Charleston, SC and Mobile, AL) and five other locations currently simply defined by country (Australia, India, Malaysia, South Africa, and Spain). The company's customers have been aggregated onto eight customer regions (Malaysia, China, France, Brazil, US Northeast, US Southeast, US Midwest, and US West) and its Planning and Forecasting department has forecasted demand for each region five years into the future. The Planning and Forecasting department has also provided other relevant data to help with the decision on how to expand capacity given the forecasted demand. Descriptions of the available data provided in the file Hanover follow: Duty: This worksheet contains the duty rate charged from each plant to each customer region. This rate is multiplied by the selling price to get the cost per unit paid in duty to ship into one country from another country. Fixed Cost: This worksheet contains the fixed cost of plant operation including capital costs, insurance, management, etc. These costs depend on the capacity level of the plant, and costs for two different levels of capacity are given for each plant location. The capacities are independent of product mix. Forecast: This worksheet contains five-year-out forecasted demand for each product by customer region. F&WH Cost: This worksheet contains freight and warehousing cost per unit from each plant location to each customer region (which are independent of product type). Price: This worksheet contains the selling price of each product for each customer region. Variable Cost: This worksheet contains the variable cost of each product at each plant. The vice president of supply chain management would like you to study this situation using the given data.

Managerial Report: Make a recommendation to Hanover's vice president of supply chain management. In particular, make a recommendation regarding whether or not a new plant is needed and if so, at which of the seven locations under consideration it should be located. Also, your report should indicate which capacity levels should be used at each plant, and how product should be sourced. The data provided in the Data sheet is provided in the below tables. Duty Data Sheet: Plant Customer Duty Rate Austin Malaysia 0.220 Austin China 0.300 Austin France 0.090 Austin Brazil 0.120 Austin United States 0.000 Australia Malaysia 0.220 Australia China 0.300 Australia France 0.090 Australia Brazil 0.120 Australia United States 0.042 Charleston Malaysia 0.220 Charleston China 0.300 Charleston France 0.090 Charleston Brazil 0.120 Charleston United States 0.000 India Malaysia 0.220 India China 0.300 India France 0.063 India Brazil 0.120 India United States 0.042 Malaysia Malaysia 0.000 Malaysia China 0.300 Malaysia France 0.063 Malaysia Brazil 0.120 Malaysia United States 0.042 Mobile Malaysia 0.220 Mobile China 0.300 Mobile France 0.090 Mobile Brazil 0.120 Mobile United States 0.000 Paris Malaysia 0.220 Paris China 0.300 Paris France 0.000 Paris Brazil 0.120 Paris United States 0.042 S Africa Malaysia 0.220 S Africa China 0.150 S Africa France 0.056 S Africa Brazil 0.120 S Africa United States 0.042 Spain Malaysia 0.220 Spain China 0.300 Spain France 0.000 Spain Brazil 0.120 Spain United States 0.042 Fixed Cost Data: Plant Capacity Cost Austin 600000 $ 725,000 Austin 1,200,000 $1,245,000 Australia 600000 $1,037,000 Australia 1200000 $1,256,000 Charleston 600000 $1,082,000 Charleston 1200000 $1,300,000 India 600000 $ 960,000 India 1200000 $1,179,000 Malaysia 600000 $ 959,000 Malaysia 1200000 $1,178,000 Mobile 600000 $1,057,000 Mobile 1200000 $1,276,000 Paris 600000 $ 875,000 Paris 1200000 $ 977,000 S Africa 600000 $ 801,000 S Africa 1200000 $1,050,000 Spain 600000 $ 994,000 Spain 1200000 $1,213,000 ForeCast Data: Customer Product Forecsted Volume Malaysia A 42900 China A 318830 France A 143600 Brazil A 19350 US Northeast A 9870 US Southeast A 102970 US Midwest A 57490 US West A 183400 Malaysia B 25800 China B 57090 France B 31980 Brazil B 27050 US Northeast B 34320 US Southeast B 71130 US Midwest B 175030 US West B 295230 Malaysia C 133160 China C 165930 France C 182080 Brazil C 77070 US Northeast C 7830 US Southeast C 155230 US Midwest C 224750 US West C 127360