1.How should BioPharma have used its production network in 2013? Should any of the plants have been idled? What is the annual cost of your proposal, including import duties?
2. How should Landgraf structure his global production net-work? Assume that the past is a reasonable indicator of the future in terms of exchange rates.
3. Is there any plant for which it may be worth adding a mil-lion kilograms of additional capacity at a fixed cost of $3 million per year?
4. How are your recommendations affected by the reduction of duties?
5. The analysis has assumed that each plant has a 100 percent yield (percentage output of acceptable quality). How would you modify your analysis to account for yield dif-ferences across plants?
6. What other factors should be accounted for when making your recommendations?
input-2013 BioPharma Inc. Regional Sales and Plant Capacities MarketDemandPlantCapacity HighcalRelax Latin America 7.07.0Brazil18.0 Europe15.012.0Germany45.0 Asia w/o Japan5.03.0India18.0 Japan7.08.0Japan10.0 Mexico3.03.0Mexico30.0 U.S.18.017.0U.S.22.0 Calculation of Fixed and Variable Costs for Specified Year Fixed and Variable Production Costs by Plant at 2013 Exchange RatesExchange RatesYear2013 PlantPlant Fixed Cost (Million $)Highcal Fixed Cost (Million $)Relax Fixed Cost (Million $)Highcal Raw Material Cost ($/kg)Highcal Production Cost ($/kg)Relax Raw Material Cost ($/kg)Relax Production Cost ($/kg)2013PlantPlant Fixed Cost (Million $)Highcal Fixed Cost (Million $)Relax Fixed Cost (Million $)Highcal Raw Material Cost ($/kg)Highcal Production Cost ($/kg)Relax Raw Material Cost ($/kg)Relax Production Cost ($/kg) Brazil20.05.05.03.65.14.66.6Brazilian Real2.15Brazil20.05.05.03.65.14.66.6 Germany45.013.013.03.96.05.07.0Euro0.75Germany45.013.013.03.96.05.07.0 India14.03.03.03.64.54.56.0Indian Rupee58.44India14.03.03.03.64.54.56.0 Japan13.04.04.03.96.05.17.0Japanese Yen97.58Japan13.04.04.03.96.05.17.0 Mexico30.06.06.03.65.04.66.5Mexican Peso12.75Mexico30.06.06.03.65.04.66.5 U.S.23.05.05.03.65.04.56.5U.S. Dollar1.00U.S.23.05.05.03.65.04.56.5 Transportation Costs ($ / kg)Variable Material, Production and Transportation Cost for Highcal From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S.From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil0.200.450.500.500.400.45Brazil8.909.159.209.209.109.15 Germany0.450.200.350.400.300.30Germany10.3510.1010.2510.3010.2010.20 India0.500.350.200.300.500.45India8.608.458.308.408.608.55 Japan0.500.400.300.100.450.45Japan10.4010.3010.2010.0010.3510.35 Mexico0.400.300.500.450.200.25Mexico9.008.909.109.058.808.85 U.S.0.450.300.450.450.250.20U.S.9.058.909.059.058.858.80 2013 Exchange RatesVariable Material, Production and Transportation Cost for Relax 2013From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazilian Real2.15Brazil11.4011.6511.7011.7011.6011.65 Euro0.75Germany12.4512.2012.3512.4012.3012.30 Indian Rupee58.44India11.0010.8510.7010.8011.0010.95 Japanese Yen97.58Japan12.6012.5012.4012.2012.5512.55 Mexican Peso12.75Mexico11.5011.4011.6011.5511.3011.35 U.S. Dollar1.00U.S.11.4511.3011.4511.4511.2511.20 Import Duties (%) Latin America EuropeAsia w/o JapanJapanMexicoU.S. 30%3%27%6%35%4% For each year the inputs are on the corresponding input sheet and the solution is obtained using Solver on the corresponding solution sheet. solution-2013 Fixed and Variable Costs at Current Exchange Rates Year2013 PlantPlant Fixed Cost (Million $)Highcal Fixed Cost (Million $)Relax Fixed Cost (Million $)Highcal Raw Material Cost ($/kg)Highcal Production Cost ($/kg)Relax Raw Material Cost ($/kg)Relax Production Cost ($/kg) Brazil20.05.05.03.65.14.66.6 Germany45.013.013.03.96.05.07.0 India14.03.03.03.64.54.56.0 Japan13.04.04.03.96.05.17.0 Mexico30.06.06.03.65.04.66.5 U.S.23.05.05.03.65.04.56.5 Variable Material, Production and Transportation Cost for HighcalTotal Variable Cost Including Duties for Highcal From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S.From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil8.99.29.29.29.19.2Brazil8.99.411.79.812.39.5 Germany10.410.110.310.310.210.2Germany13.510.113.010.913.810.6 India8.68.58.38.48.68.6India11.28.78.38.911.68.9 Japan10.410.310.210.010.410.4Japan13.510.613.010.014.010.8 Mexico9.08.99.19.18.88.9Mexico11.79.211.69.68.89.2 U.S.9.18.99.19.18.98.8U.S.11.89.211.59.611.98.8 Variable Material, Production and Transportation Cost for RelaxTotal Variable Cost Including Duties for Relax From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S.From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil11.411.711.711.711.611.7Brazil11.412.014.912.415.712.1 Germany12.512.212.412.412.312.3Germany16.212.215.713.116.612.8 India11.010.910.710.811.011.0India14.311.210.711.414.911.4 Japan12.612.512.412.212.612.6Japan16.412.915.712.216.913.1 Mexico11.511.411.611.611.311.4Mexico15.011.714.712.211.311.8 U.S.11.511.311.511.511.311.2U.S.14.911.614.512.115.211.2 Decision Variables Plants Open / Shut, Lines On / OffHighcal Quantity Shipped From / To PlantPlant Open (1) / Shut (0)Highcal On (1) / Off (0)Relax On (1) / Off (0)From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil1.01.01.0Brazil7.04.00.00.00.00.0 Germany1.00.01.0Germany0.00.00.00.00.00.0 India1.01.01.0India0.00.05.07.00.00.0 Japan0.00.00.0Japan0.00.00.00.00.00.0 Mexico1.01.01.0Mexico0.011.00.00.03.013.0 U.S.1.01.01.0U.S.0.00.00.00.00.05.0 Total Cost =$ 1,267.18Relax Quantity Shipped From / To From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil7.00.00.00.00.00.0 Germany0.012.00.05.00.00.0 India0.00.03.03.00.00.0 Japan0.00.00.00.00.00.0 Mexico0.00.00.00.03.00.0 U.S.0.00.00.00.00.017.0 Constraints CapacityDemand PlantTotal CapacityHighcalRelaxDemandLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil0711Highcal0.00.00.00.00.00.0 Germany28-028Relax0.00.00.00.00.00.0 India0612 Japan000Growth1 Mexico0327 U.S.0175 For each year the inputs are on the corresponding input sheet and the solution is obtained using Solver on the corresponding solution sheet. input-2012 BioPharma Inc. Regional Sales and Plant Capacities MarketDemandPlantCapacity HighcalRelax Latin America 7.07.0Brazil18.0 Europe15.012.0Germany45.0 Asia w/o Japan5.03.0India18.0 Japan7.08.0Japan10.0 Mexico3.03.0Mexico30.0 U.S.18.017.0U.S.22.0 Calculation of Fixed and Variable Costs for Specified Year Fixed and Variable Production Costs by Plant at 2013 Exchange RatesExchange RatesYear2012 PlantPlant Fixed Cost (Million $)Highcal Fixed Cost (Million $)Relax Fixed Cost (Million $)Highcal Raw Material Cost ($/kg)Highcal Production Cost ($/kg)Relax Raw Material Cost ($/kg)Relax Production Cost ($/kg)2012PlantPlant Fixed Cost (Million $)Highcal Fixed Cost (Million $)Relax Fixed Cost (Million $)Highcal Raw Material Cost ($/kg)Highcal Production Cost ($/kg)Relax Raw Material Cost ($/kg)Relax Production Cost ($/kg) Brazil20.05.05.03.65.14.66.6Brazilian Real1.95Brazil22.15.55.54.05.65.17.3 Germany45.013.013.03.96.05.07.0Euro0.78Germany43.312.512.53.85.84.86.7 India14.03.03.03.64.54.56.0Indian Rupee53.46India15.33.33.33.94.94.96.6 Japan13.04.04.03.96.05.17.0Japanese Yen79.79Japan15.94.94.94.87.36.28.6 Mexico30.06.06.03.65.04.66.5Mexican Peso13.15Mexico29.15.85.83.54.84.56.3 U.S.23.05.05.03.65.04.56.5U.S. Dollar1.00U.S.23.05.05.03.65.04.56.5 Transportation Costs ($ / kg)Variable Material, Production and Transportation Cost for Highcal From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S.From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil0.200.450.500.500.400.45Brazil9.7910.0410.0910.099.9910.04 Germany0.450.200.350.400.300.30Germany9.979.729.879.929.829.82 India0.500.350.200.300.500.45India9.359.209.059.159.359.30 Japan0.500.400.300.100.450.45Japan12.6112.5112.4112.2112.5612.56 Mexico0.400.300.500.450.200.25Mexico8.748.648.848.798.548.59 U.S.0.450.300.450.450.250.20U.S.9.058.909.059.058.858.80 Exchange Rate HistoryVariable Material, Production and Transportation Cost for Relax 2013From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazilian Real2.15Brazil12.5512.8012.8512.8512.7512.80 Euro0.75Germany11.9911.7411.8911.9411.8411.84 Indian Rupee58.44India11.9811.8311.6811.7811.9811.93 Japanese Yen97.58Japan15.3015.2015.1014.9015.2515.25 Mexican Peso12.75Mexico11.1611.0611.2611.2110.9611.01 U.S. Dollar1.00U.S.11.4511.3011.4511.4511.2511.20 Import Duties (%) Latin America EuropeAsia w/o JapanJapanMexicoU.S. 30%3%27%6%35%4% For each year the inputs are on the corresponding input sheet and the solution is obtained using Solver on the corresponding solution sheet. solution-2012 Fixed and Variable Costs at Current Exchange Rates Year2012 PlantPlant Fixed Cost (Million $)Highcal Fixed Cost (Million $)Relax Fixed Cost (Million $)Highcal Raw Material Cost ($/kg)Highcal Production Cost ($/kg)Relax Raw Material Cost ($/kg)Relax Production Cost ($/kg) Brazil22.15.55.54.05.65.17.3 Germany43.312.512.53.85.84.86.7 India15.33.33.33.94.94.96.6 Japan15.94.94.94.87.36.28.6 Mexico29.15.85.83.54.84.56.3 U.S.23.05.05.03.65.04.56.5 Variable Material, Production and Transportation Cost for HighcalTotal Variable Cost Including Duties for Highcal From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S.From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil9.810.010.110.110.010.0Brazil9.810.312.810.713.510.4 Germany10.09.79.99.99.89.8Germany13.09.712.510.513.310.2 India9.49.29.19.29.49.3India12.29.59.19.712.69.7 Japan12.612.512.412.212.612.6Japan16.412.915.812.217.013.1 Mexico8.78.68.88.88.58.6Mexico11.48.911.29.38.58.9 U.S.9.18.99.19.18.98.8U.S.11.89.211.59.611.98.8 Variable Material, Production and Transportation Cost for RelaxTotal Variable Cost Including Duties for Relax From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S.From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil12.512.812.812.812.712.8Brazil12.513.216.313.617.213.3 Germany12.011.711.911.911.811.8Germany15.611.715.112.716.012.3 India12.011.811.711.812.011.9India15.612.211.712.516.212.4 Japan15.315.215.114.915.215.2Japan19.915.719.214.920.615.9 Mexico11.211.111.311.211.011.0Mexico14.511.414.311.911.011.5 U.S.11.511.311.511.511.311.2U.S.14.911.614.512.115.211.2 Decision Variables Plants Open / Shut, Lines On / OffHighcal Quantity Shipped From / To PlantPlant Open (1) / Shut (0)Highcal On (1) / Off (0)Relax On (1) / Off (0)From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil1.01.01.0Brazil7.00.00.00.00.00.0 Germany1.00.01.0Germany0.00.00.00.00.00.0 India1.01.01.0India0.03.05.07.00.00.0 Japan0.00.00.0Japan0.00.00.00.00.00.0 Mexico1.01.01.0Mexico0.08.00.00.03.00.0 U.S.1.01.00.0U.S.0.04.00.00.00.018.0 Total Cost =$ 1,283.54Relax Quantity Shipped From / To From / ToLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil7.00.00.00.00.00.0 Germany0.012.00.08.00.01.0 India0.00.03.00.00.00.0 Japan0.00.00.00.00.00.0 Mexico0.00.00.00.03.016.0 U.S.0.00.00.00.00.00.0 Constraints CapacityDemand PlantTotal CapacityHighcalRelaxDemandLatin America EuropeAsia w/o JapanJapanMexicoU.S. Brazil41111Highcal0.00.00.00.00.00.0 Germany24024Relax0.00.00.0-0.00.00.0 India0315 Japan000Growth1 Mexico01911 U.S.00-0 For each year the inputs are on the corresponding input sheet and the solution is obtained using Solver on the corresponding solution sheet. input-2011 BioPharma Inc. Regional Sales and Plant Capacities MarketDemandPlantCapacity HighcalRelax Latin America 7.07.0Brazil18.0 Europe15.012.0Germany45.0 Asia w/o Japan5.03.0India18