Configuration that maximizes after-tax profits

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Reference no: EM132071909

Use Excel and Solver to find the optimal solutions to the following problem. Please printout spreadsheets and solver screen. Hot&Cold and CaldoFreddo are two European manufacturers of home appliances that have merged. Hot&Cold has plants in France, Germany, and Finland, whereas CaldoFreddo has plants in the United Kingdom and Italy. The European market is divided into four regions: north, east, south, and west. Plant capacities (millions of units per year), annual fixed costs (millions of euros per year), regional demand (millions of units), and variable production and shipping costs (euros per unit) are as shown in the table below. Capacity, Cost, and Demand Data for Hot&Cold and CaldoFreddo Each appliance sells for an average price of 300 euros. All plants are currently treated as profit centers, and the company pays taxes separately for each plant. Tax rates in the various countries are as follows: France, 0.25; Germany, 0.25; Finland, 0.3; UK, 0.2; and Italy, 0.35. Assume that taxes are applied on corporate revenues. Use Excel and Solver to find: 1. After the merger, what is the minimum cost configuration if plants can be shut down (assume that a shutdown saves 100 percent of the annual fixed cost of the plant)? 2. After the merger, what is the configuration that maximizes after-tax profits if plants can be shut down (assume that a shutdown saves 100 percent of the annual fixed cost of the plant)?

Reference no: EM132071909

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