Hot&Cold is a European manufacturer of home appliances. The European market is divided into four regions: north, east, west, and south. There are five potential countries to locate the plants: France, Germany, Finland, the U.K., and Italy. Hot&Cold needs to decide in which countries to build a plant and how much to ship from those plants to each market. 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 in Table 1 and are also included in the homework Excel template file. What is the optimal network design for Hot&Cold to minimize the total cost?

Cost, Demand, and Capacity Data North Supply Region France Germany Finland U.K. Italy Demand (millions of units) Demand Region Production and Transportation Cost euros per unit East South West Fixed Cost (Million Euros) Capacity (Millions of units per year) 100 110 105 100 1,000 501 95 105 110 105 1,000 50 90 100 115 110 850 40 105 120 110 90 1,000 50 110 105 90 115 1,150 60 45 40 50 55 Decision Variables Demand Region - Production Allocation (Million Units) North East Open a plant? (1=open, O=close) south West Supply Region France Germany Finland U.K. Italy Plants Capacity Constraint 0 Constraints Supply Region France Germany Finland U.K. Italy