Hot & Cold and CaldoFreddo are two European manufacturers of home appliances that have merged. Hot &
Question:
Hot & Cold and CaldoFreddo are two European manufacturers of home appliances that have merged. Hot & Cold has plants in France, Germany, and Finland, whereas CaldoFreddo has plants in the United Kingdom and Italy. The European market is divided into four regions : North, East, West, and South. Plant capacities (millions of units per year), annual fixed costs (millions of euros per year), regional demand (millions of units), and variable production and shipping costs (euros per unit) are shown below :
Please use Excel Solver to answer the following questions :
1. Before the merger, what was the optimal demand allocation plan for each of the two firms?
2. After the merger, what is the optimal demand allocation plan if none of the plants is to be shut down?
3. After the merger, what is the optimal network configuration and demand allocation plan if plants can be shut down (assume that a shutdown saves 100 percent of the annual fixed cost of the plant)?