please solve questions 1-3

CASE STUDY Designing the Production Network at CoolWipes Matt O'Grady, vice president of supply chain at save the company signiffcant amounts in transportation CoolWipes, thought that his current production and dis- expense in the future. tribution network was not appropriate, given the significant increase in transportation costs over the past few CoolWipes years. Compared to when the company bad set up its production facility in Chicago, transportation costs had CoolWipes was founded is the late 1980s and produced increased by a fector of more than four and were buby wipes and diaper ointmeat. Annual demand for the expected to continue growing in the next few years. A two products was as shown in Table 5-14. At that time, quick decision on building one or more new plants could the company had one factory in Chicago that produced Chapter 5 Network Design in the Supply Chain 135 both products for the entire country. The wipes line in the Matt had to decide whether to build a new plant and if so, Chicago facility had an annual capacity of 5 million units, which production lines to put into the new plant. an annunlized fixed cost of $5 million a year, and a variable cost of $10 per unit. The ointment line in the Chi- Study Questions cago facility had an annual capacity of 1 million units, an annualized fixed cost of $1.5 million a year, and a vari- 1. What is the annual cost of serving the entire nation from able cost of $20 per unit. The transportation costs per unit 2. Do you recommend adding any plant(s)? If so, where (for both wipes and ointment) ere shown in Table 5-15. should the plant(s) be built and what lines should be included? Assume that the Chicago plant will be main- New Network Options thined at its current capacity but could be run at lower uti- Matt had identified Princeton. New Jersey; Atlanta; and lization. Would your decision be different if transportation Los Angeles costs are half of their current value? What if they were Los Angeles as potential sites for new plants. Each new doublo their cament value? plant could have n wipes line, an ointment line, or both. A 3. If Matt could design a new network from scratch (essume new wipes line had aa annual capacity of 2 million units. he did not have the Chicago plant but could build it at the an annual fixed cost of $2.2 million, and a variable pro-_ cost and capacity specified in the case), what production duction cost of $10 per unit. A new ointment line had an network would you recommend? Assume that any new annual capacity of 1 million units, an annual fixed cost of plants bailt besides Chicago would be at the cost and copae\$1.5 million, and a variable cost of $20 per unit. The cur- ity specified under the new network options. Would your rent traasportation costs per unit are shown in Table 5.15. current velue? What if they were double their current value