OM 540: Supply Chain Management

Assignment 4: Distribution Systems and Network Design

Hot & Cold and CaldoFreddo are two European manufacturers of home appliances that have merged. Hot & Coldhas 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.

Company	Plant	Variable Production and Shipping Costs				Capacity	Annual Fixed Cost
		North	East	South	West
Hot & Cold	France	100	110	105	100	70	1000
	Germany	95	105	110	105	100	2000
	Finland	90	100	115	110	80	1500
	Demand	60	20	30	90
CaldoFreddo	UK	105	120	110	90	60	1200
	Italy	110	105	90	115	90	1300
	Demand	20	30	30	20

Use Excel Solver to answer the following questions:

1. Before the merger, what was the optimal demand allocation plan for Hot & Cold?

2. Before the merger, what was the optimal demand allocation plan for CaldoFreddo?

3. After the merger, what is the optimal demand allocation plan if none of the plants is to be shut down?

4. 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)?

Please submit your Excel spreadsheet (each question should be on a separate tab) to the Week 4 Individual Assignment drop box.

I am not sure what "need time" in the comment means. There are no time constraints in this problem.