Page 2 of 3 O Future Plastics manufactures plastic products for industrial use worldwide. In order to meet demand, they are considering setting up a facility in each region in order to lower transportation costs and possibly avoid duties that could be imposed if the product is imported from another region. The disadvantage of this approach is that plants are sized to meet local demand and may not fully exploit economies of scale. Therefore, Future Plastics is also interested in determining the appropriate size of the facility to build in each location and is choosing between facilities with capacities of 5 or 10 million. Demand Region Production and Transportation Cost per Low Capacity High Capacity 1,000,000 Units North South South Fixed Capacity Fixed Capacity Supply Region America America Asia Europe Cost Cost North America 40 45 65 3000 4500 10 South America 51 57 47 60 3200 5 4800 10 South Asia 58 63 45 31 2000 5 3000 10 Europe 71 50 51 53 1800 S 2700 10 Demand 6 4 7 8 Europe is critical for Future Plastic's development in the future. Hence, the company wants to ensure that either a low-capacity or a high facility capacity facility is built in the European supply region. If the high-capacity facility is built in South America, then high capacity must be built in North America as well