1. Hiring cost in Chile increases by 25%.
2. Inventory cost increases by 25%.
3. Production cost in the U.S. decreases by 25%.

April July January 1000 February March 1100 1300 May 1500 June 1800 September October November December 2400 2000 1600 1200 Demand 2200 2500 800 Production decision (1000 board ft) Regular 1500 Overtime Local - US Total 1500 1500 0 0 1500 1500 0 0 1500 0 1500 0 0 1500 0 0 1500 1500 0 0 1500 1500 0 900 2400 1500 0 900 2400 1500 0 500 2000 1500 0 100 1600 1200 0 0 1200 COST PARAMETERS Production cost in Chile - Regular tim Production cost in Chile - Overtime Production cost in the US Transportation cost (from Chile) Hiring/training cost in Chile Layoff cost in Chile Holding cost Shipping cost 8001 0 0 800 $150 per 1000 board feet $200 per 1000 board feet $400 per 1000 board feet $50 per 1000 board feet $1,000 per new employee $500 per employee $25 per 1000 board feet $50 per 1000 board feet 0 1500 Ending Inventory 500 900 1100 1100 800 1000 0 0 0 0 30 0 0 1500 1000 board feet per month 1 month 50 1000 board feet per employee per m 160 hours per month per employee 0 o Chile Capacity decision (1000 board ft) Existing Employees Hire Layoff Net Employees Regular capacity 1 1500 Overtime capacity 375 0 0 0 0 30 0 0 30 1500 375 30 0 30 0 0 30 1500 375 0 0 30 1500 375 0 30 1500 375 30 30 30 1500 375 CAPACITY PARAMETERS Maximum shipping capacity Lead time Production rate in Chile Labor capacity - Regular time # of employees in Chile Maximum inventory capacity Overtime capacity Backorder Demand has to be met 0 0 30 1500 375 20 1500 375 1500 375 1500 375 24 1200 300 16 800 200 3000 1000 board feet per month 25% of the regular hours not allowed $225,000 $225,000 $120,000 $0 $0 Costs Regular production Overtime production Shipping cost Local - US production Inventory Hiring/Layoff Total Costs $225,000 $0 $75,000 $0 $12,500 $10,000 $322,500 $225,000 $0 $75,000 $0 $22,500 $0 $322,500 $225,000 $0 $75,000 $0 $27,500 $0 $327,500 $225,000 $0 $75,000 $0 $27,500 $0 $327,500 $225,000 $0 $75,000 $0 $20,000 $225,000 $0 $75,000 $0 $2,500 $225,000 $0 $75,000 $360,000 $225,000 $0 $75,000 $40,000 $75,000 $360,000 $0 $75,000 $200,000 $180,000 $0 $60,000 $0 $0 $3,000 $243,000 $0 $0 $0 $40,000 $0 $0 $4,000 $164,000 $0 $0 $0 $320,000 $302,500 $660,000 $660,000 $500,000 $340,000 $4,489,500 OVERALL COST OF THE MIXED STRATEGY April July January 1000 February March 1100 1300 May 1500 June 1800 September October November December 2400 2000 1600 1200 Demand 2200 2500 800 Production decision (1000 board ft) Regular 1500 Overtime Local - US Total 1500 1500 0 0 1500 1500 0 0 1500 0 1500 0 0 1500 0 0 1500 1500 0 0 1500 1500 0 900 2400 1500 0 900 2400 1500 0 500 2000 1500 0 100 1600 1200 0 0 1200 COST PARAMETERS Production cost in Chile - Regular tim Production cost in Chile - Overtime Production cost in the US Transportation cost (from Chile) Hiring/training cost in Chile Layoff cost in Chile Holding cost Shipping cost 8001 0 0 800 $150 per 1000 board feet $200 per 1000 board feet $400 per 1000 board feet $50 per 1000 board feet $1,000 per new employee $500 per employee $25 per 1000 board feet $50 per 1000 board feet 0 1500 Ending Inventory 500 900 1100 1100 800 1000 0 0 0 0 30 0 0 1500 1000 board feet per month 1 month 50 1000 board feet per employee per m 160 hours per month per employee 0 o Chile Capacity decision (1000 board ft) Existing Employees Hire Layoff Net Employees Regular capacity 1 1500 Overtime capacity 375 0 0 0 0 30 0 0 30 1500 375 30 0 30 0 0 30 1500 375 0 0 30 1500 375 0 30 1500 375 30 30 30 1500 375 CAPACITY PARAMETERS Maximum shipping capacity Lead time Production rate in Chile Labor capacity - Regular time # of employees in Chile Maximum inventory capacity Overtime capacity Backorder Demand has to be met 0 0 30 1500 375 20 1500 375 1500 375 1500 375 24 1200 300 16 800 200 3000 1000 board feet per month 25% of the regular hours not allowed $225,000 $225,000 $120,000 $0 $0 Costs Regular production Overtime production Shipping cost Local - US production Inventory Hiring/Layoff Total Costs $225,000 $0 $75,000 $0 $12,500 $10,000 $322,500 $225,000 $0 $75,000 $0 $22,500 $0 $322,500 $225,000 $0 $75,000 $0 $27,500 $0 $327,500 $225,000 $0 $75,000 $0 $27,500 $0 $327,500 $225,000 $0 $75,000 $0 $20,000 $225,000 $0 $75,000 $0 $2,500 $225,000 $0 $75,000 $360,000 $225,000 $0 $75,000 $40,000 $75,000 $360,000 $0 $75,000 $200,000 $180,000 $0 $60,000 $0 $0 $3,000 $243,000 $0 $0 $0 $40,000 $0 $0 $4,000 $164,000 $0 $0 $0 $320,000 $302,500 $660,000 $660,000 $500,000 $340,000 $4,489,500 OVERALL COST OF THE MIXED STRATEGY