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Marcus Nomad, vice president for operations of HHN Inc, a manufacturer of cabinets for telephone switches is constrained with meeting the five year forecast by limited capacity at the existing three plants. The three plants are Waterloo, Pusan, and Bogota. You and his able assistant, have been told that because of existing capacity constraints and the expanding world market for HHN cabinets, a new plant is to be added to the existing three plants. The real estate department had advised My.Nomad that the two sites seem particularly good because of a stable political situation and tolerable exchange rate: Dublin, Ireland, and Fontainebleau, France. Mr. Nomad suggests that you should be able to use the data below to determine where the fourth plant should be located, on the basis of production costs and transportation costs. Your goal is to make the optimal selection of one new site based on minimizing costs. You need to develope two flow models. Also, using this optimal site selection, provide the separate total operating costs for each of the plants.

PLANT LOCATIONS MARKET AREA Canada Waterloo Pusan Bogota Fontainebleau Dublin Demand: 4,000 Production cost Transportation cost $50 $30 $40 $10 $25 $20 $50 $45 $25 $25 South America Demand: 5,000 Production cost Transportation cost: $50 $30 $40 $20 $25 $10 $50 $45 $30 $30 Pacific Rim Demand 10,000 Production cost: Transportation cost $50 $30 40 $25 $10 $25 $50 $45 $40 $40 Europe Demand: 5,000 Production cost. Transportation cost S50 $30 $40 $25 $40 $30 $50 $45 $10 $20

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