Question 2

NuFer International manufactures fertilisers to be transported all over the world. It has five manufacturing plants and sees demand from Africa, Asia, Europe, North America and South America. Table 1 shows the annual demand from these regions, the production capacities and locations of the manufacturing plants as well as the cost of producing each ton of fertilisers at the plants. As can be seen from the table, the production costs are in the local currency of the country where the plant is located, while the transportation costs from each plant to each market are in U.S. dollars. The management has to come up with a production plan for the next year based on the expected exchange rates in Table 2.