Applichem wants to allocate the capacity of its worldwide manufacturing plants to fulfill its customer demand. Applichem makes a product, R, which is used by plastic molding companies around the world. R sells for $1/lb. Its plants are located in Gary, Indiana, Windsor, Ontario, Frankfurt, Germany, Mexico City, Caracus, Venezula, and Osaka, Japan. Its current strategy is to make and ship R as shown in the table below (x 100,000 lbs)

Plant Production Costs and Capacity are shown in the table below:

The current Transportation Cost ($/1000 lb), Import Duties, and current customer Demand are shown in the table below:

Your boss has asked you to look at this and suggest improvements to increase profit.
a. What is the current cost being incurred and profit earned?

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romTo Mexico Canada Venezula EuropeUnited StatesJapan Mexico City3.0 Windsor <%.3 2.6 A.1 0.0 12.4 14.0 rankfurt 5.6 Gary apan lant Cost/1000lbs Capacity (100,000 lbs) Mexico City 95.01 Windsor 97.35 Caracas 116.34 22.0 3.7 .5 7.0 rankfurt 76.69 Gary Osaka 102.9318.5 153.80 5.0 Plant/Country Mexico Canada Venezuela Europe United StatesJapan Mexico Citv 0 Windsor 11.000 1140 7.00 11.00 11.00 14.00 9.00 11.50 6.00 13.00 14.30 13.30 12.50 Caracas 7.00 10.00 0 13.00 10.40 rankfurt 10.00 11.50 12.50 Gary eaka Demand (100,000 1bs) Import Duty 11.20 10.00 6.00 11.0010.00 14.00 13.00 12.50 14.20 13.00 30 26 160 200 264 20.0 26.4 11.9 50% 9.5% 4.5% 690