BUSINESS ANALYTICS

9-19. Marc Smith, vice president for operations of HHN, Inc., a manufacturer of cabinets for telephone switches, is constrained from meeting the 5-year forecast by limited capacity at the existing three plants. These three plants are Waterloo, Pusan, and Bogota. You, as his able assistant, have been told that because of existing capacity constraints and the expanding world market for HHN cabinets, a new plant is to be added to the existing three plants. The real estate department has advised Marc that two sites seem particularly good because of a stable political situation and tolerable exchange rate: Dublin, Ireland, and Fontainebleau, France. Marc suggests that you should be able to take the data on the next page and determine where the fourth plant should be located on the basis of production costs and transportation costs. Which location is better? Data for Problem 9-19 PLANT LOCATION BOGOTA FONTAINEBLEAU WATERLOO PUSAN DUBLIN $30 $50 10 $40 20 $50 25 $45 25 25 50 20 30 25 40 10 50 30 45 30 MARKET AREA Canada Demand 4,000 Production cost Transportation cost South America Demand 5,000 Production cost Transportation cost Pacific Rim Demand 10,000 Production cost Transportation cost Europe Demand 5,000 Production cost Transportation cost Capacity 50 25 30 10 40 25 50 40 45 40 50 25 8,000 30 40 2,000 40 30 5,000 50 10 9,000 45 20 9,000