Assignment Refer Essay Example

facility each year. Finally, the South American facility will only provide to its own market with 4 million units and 6 million unused units each year.

Sturdyfon has three production facilities in Europe, North America and Rest of Asia. Their lowest achievable production and distribution network cost prior to the merger is $512. 68 million per year; with $250 million per year for fixed cost and $262. 68 million for variable costs and import duty fees. Their European facility will provide for the European and non-European countries in Europe, and Africa annually with 4 million units, 8 million units, and 7 million units, respectively. Each year, 7 million units will remain unused.

The North American and South American markets will be provided by the North American facility with 12 million units in North America, 1 million units shipped to South America, and 7 million units remaining in the facility each year. Finally, the Asian facility will provide for the markets in Japan and rest of Asia and Australia annually with 7 million units and 3 million units, respectively. Part B After the merger, the lowest achievable production and distribution network cost is $1,066. 82 million; with $510 million for fixed cost and $556. 82 for variable cost and import duty fees.

Sleekfon will provide to North and South American, African, and both European markets. Their European facility will provide 4 million units to Europe, 11 million units to non-Europe countries in Europe, and 2 million units to Africa annually; with 3 million remaining as storage. The North American market will be served with 6 million units per year by the facility in North American; with

14 million remaining in storage. The market in South America will be served by its local plant with 5 million units per year; with 5 million units in storage.

Sturdyfon’s facilities will serve markets in North America, Europe, Africa, Japan, and rest of Asia and Australia. The facility in Europe will provide 20 million units to the European market. Their North American facility will serve 16 million units to the North American market and 4 million units to the Japanese market. Finally, the facility in Asia will serve 5 million units to Japan and 5 million units to Rest of Asia and Australia annually. Part C Considering the scaled back or shutdown option after the merger, the lowest annual achievable cost for production and distribution network is $988. 4 million; with $430 million fixed cost and $558. 94 million variable cost and import duty fees. Sleekfon With the scaled back or shutdown option in effect for the plants, Sleekfon has no scale back plants; however, the North American facility will be shutdown. Thus only the European and South American facilities will remain in operation. The European market will have 20 million units provided by the European facility. The South American plant will provide 1. 98 million units to North American market, 5 million units to South American market, and 3. 01 million to Japanese market.

Sturdyfon No scale back or shutdown affected Sturdyfon. Their European plant will serve 20 thousand units to the North American market, 4 million units to the European market, 11 million units to the market in non-European countries, 990 thousand units to the Japanese market, and 2 million to the African

market; with 2 million units left in storage at the facility. The North American market will be served by the North American facility. Finally, the market in Japan and the Rest of Asia and Australia will each have 5 million units provided to them by the facility in the rest of Asia. Part D

When the duty fees were reduced to zero, the lowest achievable cost for production and distribution network became $956. 3 million, which is reduced by $62. 64 million; with a lowered variable cost of $526. 3 million and fixed cost remained the same. The following changes were in effect when duty-free is available: Sleekfon All facilities remained in operation. The European plant will serve 6. 78 million units to Europe, 11 million units to non-European countries in Europe, and 2 million units to Africa; with 220 thousand units remaining in the facility. The North American plant will serve 2. 8 million units to the North Amercian market and 17. 22 units to the European market. The South American facility will serve 5 million units to the South American market and 4 million units to the Japanese market; with 1 million remaining in storage at the plant. Sturdyfon On the other hand, Sturdyfon’s European plant will be shutdown with the duty-free option. Their North American plant will serve 19. 22 million units to the North American markets; with 780 thousand units in storage. The plant in Rest of Asia will remain to serve 5 million units to each of the Japanese and rest of the Asian and Australian markets.

Question 5-5 **Refer to excel sheet Question 5-5 for all the calculations according

to the respective question parts. This is a cost minimization problem, thus the target is to achieve the lowest cost possible. The constraints in all parts of a, b, and c are the same. We had to ensure that the unused capacity unit was a positive number and the unmet demand must remain at zero. For all parts, an additional constraint and an assumption were made; the assumption is that per-merger scaling back and shutdown are possible.

The additional constraint of “only one choice” can be determined from the 3 plant operation options: keep current capacity, scale back capacity, or shut down the plant. In Part B, the additional constraint for the expansion capacity of 10 million units per year or 20 million units per year was added to the “only one choice” constraint. In Part C, there is no duty fee charge. Global Demand changed: No Growth in North America, Europe (EU) and Japan; 20% growth in South America, Europe (Non-EU), and Africa; and 200% growth in the Rest of Asia and Australia.

Part A Considering the scaled back or shutdown option with increased capacities in certain markets after the merger, the lowest annual achievable cost for production and distribution network is $1,126. 39 million; with $480 million fixed cost and $646. 38 million variable cost and import duty fees. Sleekfon With this growth, all Sleekfon plants remain in operation. The markets in European will have 19. 67 million units and non-European countries will have 240 thousand units provided by the European facility annually; with 90 thousand units remaining in storage.

The North American plant will provide to all markets except in Africa: 7.

97 million units to North America, 2. 71 million units to South America, 20 thousand units to Europe, 20 thousand units to non-European countries in Europe, 8. 90 million units to Japan and 260 thousand units to the rest of Asia and Australia; with 120 thousand units remaining in storage. The South American plant will provide 30 thousand units to the South American market, 110 thousand units to European market, and 9. 87 million to the markets in non-European countries. Sturdyfon