Network Planning: Your new efficient air conditioners have been successful in the North American market and now you want to spread them to South America. Your forecasts predict the following demands: the US market will buy 300,000, a 10% increase from last year. You predict that Mexico will buy 250,000, a 20% increase from last year and in Brazil you are confident you can sell 500,000. You can continue to produce in the plant you purchased in the US or you can sub out manufacturing to sub-contractors in Mexico or Brazil

The variable cost to produce parts in each region. US $250.00 Mexico or Brazil $200.00

2. Considering only production costs what would be the lowest possible production costs? A. $262,500,000 B. 217,500,000 C. 217,000,000 D. 215,000,000 E. 216,000,000 F. 216,500,000 G. 213,500,000 H. None of the above

3. Considering all costs both production and transportation what is the best network design to deliver the air conditioners to all customers? A. US, small plant Mexico, small plant Brazil B. Small plant Mexico, small plant brazil C. All US D. All Mexico E. All Brazil F. US, large plant Mexico G. US, large plant Brazil H. Large plant Mexico, small plant Brazil I. Large plant Brazil, small plant Mexico J. None of the above

4. What is the total cost to deliver the demanded air conditioners to all customers under the lowest cost scenario? A. $262,500,000 B. $252,000,000 C. $251,000,000 D. $239,750,000 E. $239,000,000 F. $229,000,000

5. After you submitted the distribution plan to your boss, the company accountant comes to you and says the US plant does have 1.5 million in fixed costs that should be considered. How does this affect your network design? A. No Change B. Change to All production in US C. Change to All production in Mexico D. Change to All production in Brazil E. Change to Large plant in Brazil and a small plant in Mexico F. None of the above

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