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Hot & Cold and CaldoFreddo are two European manufacturers of home appliances that have merged. Hot & Cold has plants in Sweden, Germany, and Finland,

Hot & Cold and CaldoFreddo are two European manufacturers of home appliances that have merged. Hot & Cold has plants in Sweden, Germany, and Finland, whereas CaldoFreddo has plants in the Spain and Italy. The European market is divided into four regions: North, East, South, and West. Plant capacities (millions of units per year), annual fixed costs (millions of euros per year), regional demand (millions of units), and variable production and shipping costs (euros per unit) are shown below.

Company

Plant

Variable Production and Shipping Costs

Capacity

Annual

Fixed Cost

North

East

South

West

Hot & Cold

Sweden

100

110

105

100

50

1200

Germany

95

105

110

105

90

1500

Finland

90

100

115

110

70

1300

Demand

50

20

20

70

CaldoFreddo

Spain

105

120

110

90

50

1400

Italy

110

105

90

115

70

1600

Demand

20

10

30

20

Use Excel Solver to answer the following questions:

  1. Before the merger, show the optimal demand allocation plan for Hot & Cold.

  1. Before the merger, show the optimal demand allocation plan for CaldoFreddo.

  1. After the merger, show the optimal demand allocation plan if none of the plants is to be shut down.

  1. After the merger, show the demand allocation plan if plants can be shut down (assume that a shutdown saves 100 percent of the annual fixed cost of the plant). Be sure to indicate which plants, if any, should be shut down.

Submit your Excel spreadsheet (each question should be on a separate tab) You can write the answers on the spreadsheet itself.

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