LLL L LLLLLLLLLLLLLLLLLLLLLLL - Exercise 3: Sunchem, a manufacturer of printing inks, has five manufacturing plants worldwide. Their locations and capacities are shown in Table 5-7 along with the cost of producing 1 ton of ink at each facility. The production costs are in the local currency of the country where the plant is located. The major markets for the inks are North America, South America, Europe, Japan, and the rest of Asia. Demand at each market is shown in Table 5-7. Transportation costs from cach plant to each market in U.S. dollars are shown in Table 5-7. Management must come up with a production plan for the next year. A. If exchange rates are expected as in Table 5-8, and no plant can run below 50 percent of capacity, how much should each plant produce, and which markets should each plant supply? B. If there are no limits on the amount produced in a plant, how much should each plant produce? C. Can adding 10 tons of capacity in any planet reduce costs? D. How should Sunchem account for the fact that exchange rates fluctuate over time? Table 5.7 - Capacity. Demand, Production, and Transportation Costs for Sunchem North South Capacity Production America Europe Japan America Asia Tons/Year Cost/Ton United States 600 1,300 2,000 1,200 1.700 185 S 10,000.00 Germany 1,300 600 1,400 1,400 1300 475 15.000.00 Japan 2000 1400 300 2100 $900 50 $1,800,000 Brazil 2200 1400 2100 2100 200 $ 13,000 India 2200 1300 1000 2300 80 400,000 Demand (tons year) 270200120190 100 800 800 Table 5-8 - Anticipated exchange rate for the next year Dollar Euro Yen Real Rupee 11 1.993 107.7 1.78 43.55 0.502 1 54.07 0.89 21.83 0.0093 0.0185 1 0 .0160 .405 0.5621 1.1241 60.65 0.023 0.046 2.47 245 Rupee FO 1094 P MacBook Pro LLL L LLLLLLLLLLLLLLLLLLLLLLL - Exercise 3: Sunchem, a manufacturer of printing inks, has five manufacturing plants worldwide. Their locations and capacities are shown in Table 5-7 along with the cost of producing 1 ton of ink at each facility. The production costs are in the local currency of the country where the plant is located. The major markets for the inks are North America, South America, Europe, Japan, and the rest of Asia. Demand at each market is shown in Table 5-7. Transportation costs from cach plant to each market in U.S. dollars are shown in Table 5-7. Management must come up with a production plan for the next year. A. If exchange rates are expected as in Table 5-8, and no plant can run below 50 percent of capacity, how much should each plant produce, and which markets should each plant supply? B. If there are no limits on the amount produced in a plant, how much should each plant produce? C. Can adding 10 tons of capacity in any planet reduce costs? D. How should Sunchem account for the fact that exchange rates fluctuate over time? Table 5.7 - Capacity. Demand, Production, and Transportation Costs for Sunchem North South Capacity Production America Europe Japan America Asia Tons/Year Cost/Ton United States 600 1,300 2,000 1,200 1.700 185 S 10,000.00 Germany 1,300 600 1,400 1,400 1300 475 15.000.00 Japan 2000 1400 300 2100 $900 50 $1,800,000 Brazil 2200 1400 2100 2100 200 $ 13,000 India 2200 1300 1000 2300 80 400,000 Demand (tons year) 270200120190 100 800 800 Table 5-8 - Anticipated exchange rate for the next year Dollar Euro Yen Real Rupee 11 1.993 107.7 1.78 43.55 0.502 1 54.07 0.89 21.83 0.0093 0.0185 1 0 .0160 .405 0.5621 1.1241 60.65 0.023 0.046 2.47 245 Rupee FO 1094 P MacBook Pro
