Question
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:
- Before the merger, show the optimal demand allocation plan for Hot & Cold.
- Before the merger, show the optimal demand allocation plan for CaldoFreddo.
- After the merger, show the optimal demand allocation plan if none of the plants is to be shut down.
- 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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started