Answer these 6 study questions with using EXCEL (solver), it is mandatory.

1.How should BioPharma have used its production network in 2013? Should any of the plants have been idled? What is the annual cost of your proposal, including import duties?

2. How should Landgraf structure his global production net-work? Assume that the past is a reasonable indicator of the future in terms of exchange rates.

3. Is there any plant for which it may be worth adding a mil-lion kilograms of additional capacity at a fixed cost of $3 million per year?

4. How are your recommendations affected by the reduction of duties?

5. The analysis has assumed that each plant has a 100 percent yield (percentage output of acceptable quality). How would you modify your analysis to account for yield dif-ferences across plants?

6. What other factors should be accounted for when making your recommendations?

BioPharma, Inc. 2 TABLE 6-18 Sales by Region and Production/Capacity by Plant of Highcal and Relax (in Millions of Kilograms) management, scheduling, expediting, accounting, BioPharma transports the chemicals in specialized maintenance, and so forth. Each plant that is capable of containers by sea and in specialized trucks on land. The producing either Highcal or Relax also incurs a product- transportation costs between plants and markets are as related fixed cost that is independent of the quantity of shown in Table 6-20. Historical exchange rates are each chemical produced. The product-related fixed cost shown in Table 6-21 and the regional import duties in includes depreciation of equipment specific and other Table 6-22. Given regional trade alliances, import duties fixed costs that are specific to a chemical. If a plant in reality vary based on the origin of the chemical. For maintains the capability to produce a particular chemi- simplicity's sake, however, the task force has assumed cal, it incurs the corresponding product-related fixed that the duties are driven only by the destination. Local cost even if the chemical is not produced at the plant. production within each region is assumed to result in no The variable production cost of each chemical import duty. Thus, production from Brazil, Germany, consists of two components: raw materials and produc- and India can be sent to Latin America, Europe, and the tion costs. The variable production cost is incurred in rest of Asia excluding Japan, respectively, without incurproportion to the quantity of chemical produced and ring any import duties. Duties apply only to the raw includes direct labor and scrap. The plants themselves material, production, and transportation cost component can handle varying levels of production. In fact, they can and not to the fixed cost component. Thus, a product also be idled for the year, in which case they incur only entering Latin America with a raw material, production, the fixed cost and none of the variable cost. and transportation cost of $10 incurs import duties of $3. 170 Chapter 6 Designing Global Supply Chain Networks TABLE 6-21 History of Exchange Rates in Currency/U.S.\$1 (at the Beginning of Each Year) BioPharma, Inc. 2 TABLE 6-18 Sales by Region and Production/Capacity by Plant of Highcal and Relax (in Millions of Kilograms) management, scheduling, expediting, accounting, BioPharma transports the chemicals in specialized maintenance, and so forth. Each plant that is capable of containers by sea and in specialized trucks on land. The producing either Highcal or Relax also incurs a product- transportation costs between plants and markets are as related fixed cost that is independent of the quantity of shown in Table 6-20. Historical exchange rates are each chemical produced. The product-related fixed cost shown in Table 6-21 and the regional import duties in includes depreciation of equipment specific and other Table 6-22. Given regional trade alliances, import duties fixed costs that are specific to a chemical. If a plant in reality vary based on the origin of the chemical. For maintains the capability to produce a particular chemi- simplicity's sake, however, the task force has assumed cal, it incurs the corresponding product-related fixed that the duties are driven only by the destination. Local cost even if the chemical is not produced at the plant. production within each region is assumed to result in no The variable production cost of each chemical import duty. Thus, production from Brazil, Germany, consists of two components: raw materials and produc- and India can be sent to Latin America, Europe, and the tion costs. The variable production cost is incurred in rest of Asia excluding Japan, respectively, without incurproportion to the quantity of chemical produced and ring any import duties. Duties apply only to the raw includes direct labor and scrap. The plants themselves material, production, and transportation cost component can handle varying levels of production. In fact, they can and not to the fixed cost component. Thus, a product also be idled for the year, in which case they incur only entering Latin America with a raw material, production, the fixed cost and none of the variable cost. and transportation cost of $10 incurs import duties of $3. 170 Chapter 6 Designing Global Supply Chain Networks TABLE 6-21 History of Exchange Rates in Currency/U.S.\$1 (at the Beginning of Each Year)