Component	Assembly
BC	1	2
WA	3	4

Table 1: Output per worker per month

You are a senior manager in a multinational corporation, Hi-tech Inc., producing a specialized high-technology product. Each finished product contains two components that must be produced and assembled. Thus, a given employee might work in either component production or assembly. Your firm has production facilities in two places: BC and Washington. BC workers are somewhat less productive than Washington workers. The final total production must be such that

WCPC = 2WAPA (1)

where WC is the number of workers allocated to component production, WA the number of workers doing the assembly, PC is the number of component a worker can produce, and PA is the number of products that a worker can assemble. Note how the right hand side in equation 1 has a 2 to model the fact that we need two components per assembly.

Four BC workers could produce enough components in a month for one BC worker to assemble the components and output two products per month. In Washington, eight workers can produce enough components for 12 finished products per month assembled by 3 workers. These basic data are illustrated in Table 1.

At the moment, you have 100 workers under contract in BC and 100 under contract in Washing- ton. No workers can be laid off in the short run.

1. Assuming the cost of transporting components is zero, how should production be allocated be- tween BC and Washington to maximize output per month?

2. Assume that you can now shut down plants. Wage in BC is 15 CAD per hour and the wage in Washington is 12 USD per hour. In what range of exchange rate would you see both plants running?