Analysis Report
Amkoa, Sally
Lin, Xinqi
Senecha, Niharika
Towers, Kathleen
 Background
 Goal
 Data Gathered
 Challenges
 Modeling/Analysis
 Fluctuation Measures
 Recommendations
 Applichem produces release-ease, used in molding
plastic parts
 Six plants manufacture Release-ease: Gary,
Frankfurt, Mexico, Canada, Venezuela, Japan
 Main competitor has one large plant
 To determine whether or not to keep production of
Release-Ease within current plants or move
production to another location
 To compare cost of operations at different plants
 To include measures for exchange rates
fluctuations, inflation, etc.
 Release-ease made in Frankfurt plant met
specifications better than that made in other
plants
 Applichem:
 largest market share
 33% of the demand comes directly from the US
 only company whose product has been approved by
Japanese regulators
 Minimize the import duty costs as well as the
transportation costs to optimize efficiency of
manufacturing
 To consider future changes due to inflation,
increase in demand, etc.
 Production numbers from previous year (million lb units)
 Plant capacities (million lb units)
 Total production costs for each location (100 lb units)
 Transport costs to/from each location (cents per pound)
 Import duties for each country
TotalCostA to B = (TransportA to B + ProductionAt A ) * (1 + ImportDutyInto B)
From/To
Mexico
Canada
Venezuela
Frankfurt
Gary
Sunchem
Mexico
95.01
106.41
153.02
116.08
110.78
115.55
Canada
108.35
97.35
155.03
118.10
107.73
116.19
Venezuela
123.34
126.34
116.34
141.63
132.44
138.48
Frankfurt
86.69
88.19
133.79
76.69
91.85
95.39
Gary
112.93
108.93
170.90
123.66
102.93
122.36
Sunchem
167.80
166.80
249.45
183.96
174.31
153.80
From/To
Mexico
Canada
Venezuela
Frankfurt
Gary
Sunchem
Demand
Mexico
3.0
0.0
0.0
0.0
0.0
0.0
3.0
Canada Venezuela Frankfurt Gary
0.0
0.0
0.0
3.2
2.6
0.0
0.0
1.1
0.0
4.5
0.0
0.0
0.0
11.5
20.0
3.6
0.0
0.0
0.0
18.5
0.0
0.0
0.0
0.0
2.6
16.0
20.0
26.4
Sunchem
0.0
0.0
0.0
11.9
0.0
0.0
Total
6.2
3.7
4.5
47.0
18.5
0.0
Remaining
Capacity
15.8
0.0
0.0
0.0
0.0
5.0
11.9
• Recommended amounts for minimum total cost, constrained by
demand, plant production capacities
1982
1983
(million lb units)
(million lb units)
Mexico
17.2
6.2
Canada
2.6
3.7
Venezuela
4.1
4.5
Frankfurt
38
47.0
Gary
14
18.5
Sunchem
4
0.0
Total Cost
(millions of $)
83.70*
79.77
 Stop ReleaseEase production in
Japan (Sunchem)
 Maximize production in
Canada, Venezuela, Frankfurt,
and Gary
 Reduce production in Mexico
since it’s cheaper to produce in
other locations
*Calculated using cost and capacity predicted for 1983
 Hike in gas prices would increase shipping costs
 If US dollar becomes weak, importation becomes
expensive
 Increased tariffs make it expensive to get the
product to the consumer or raw materials for
production
 Global carbon footprint policy: companies might be
required to pay for emissions permits
 Keep producing Release-ease in Gary, Indiana, but work on improving production
efficiencies
 Reduce production in Mexico—can produce Release-ease at lower cost in other
locations
 Stop producing Release-ease in Japan. High costs and low productivity outweigh
plant’s technologically advanced status
 Let Japan focus on R&D and producing other products
 Employee training and rotations across plants to increase exposure about technology
and best practices
 Adjust production volumes of plants to maximize capacity and reduce transportation
costs