Problem 2: (25 points) Blue Computers, a major server manufacturer in the United States, currently has options to build plants in Kentucky, Pennsylvania, North Carolina and California. In every region, Blue Computers can decide between a low-capacity plant (400,000 units) and/or a high capacity one (800,000 units). The firm divides the United States into four markets: northeast, southeast, Midwest, and south. Annual fixed costs, production and shipping costs per unit, and regional demand are shown in the Table below. Variable Production & Shipping Cost ($/unit) Northeast 180 South 185 Supply Region Kentucky Pennsylvania N. Carolina California Demand Fixed Costs ($) Low Cap. High Cap. $5,600,000 $9,300,000 $6,100,000 $10,200,000 $6,000,000 $10,000,000 $5,500,000 $9,200,000 Southeast Midwest 180 184 220 195 180 175 190 180 450,000 1,050,000 220 185 195 175 200 600,000 170 600,000 a) If Blue Computers sets an objective of minimizing total fixed and variable costs, where should they build their new plants? How should the network be structured? Hint: Blue Computers can decide to open both a low and high-capacity plants in the same region. b) Revise your answer to part (a) if Blue Computers decide to only open High- Capacity plants. Problem 2: (25 points) Blue Computers, a major server manufacturer in the United States, currently has options to build plants in Kentucky, Pennsylvania, North Carolina and California. In every region, Blue Computers can decide between a low-capacity plant (400,000 units) and/or a high capacity one (800,000 units). The firm divides the United States into four markets: northeast, southeast, Midwest, and south. Annual fixed costs, production and shipping costs per unit, and regional demand are shown in the Table below. Variable Production & Shipping Cost ($/unit) Northeast 180 South 185 Supply Region Kentucky Pennsylvania N. Carolina California Demand Fixed Costs ($) Low Cap. High Cap. $5,600,000 $9,300,000 $6,100,000 $10,200,000 $6,000,000 $10,000,000 $5,500,000 $9,200,000 Southeast Midwest 180 184 220 195 180 175 190 180 450,000 1,050,000 220 185 195 175 200 600,000 170 600,000 a) If Blue Computers sets an objective of minimizing total fixed and variable costs, where should they build their new plants? How should the network be structured? Hint: Blue Computers can decide to open both a low and high-capacity plants in the same region. b) Revise your answer to part (a) if Blue Computers decide to only open High- Capacity plants