SCD Report Tue Mor Group19.

INTERNATIONAL UNIVERSITY
SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT
PROJECT
Logistic Engineering And Supply Chain
Design
Case study: BioPharma.Inc
Group 19
Phan Thảo Nghi IELSIU20362
Lê Ngọc Uyển Như IEIEIU19063
Trần Kim Thành IELSIU20216
Trương Cao Mỹ Tú IELSIU20224
Lecturer: Nguyễn Văn Hợp
Class: Logistic Engineering and Supply Chain Design_S2_2022-23_G19
1
Table of content
Table of content ......................................................................................................................... 1
Abstract ...................................................................................................................................... 2
1. Introduction ............................................................................................................................ 2
1.1. Current situation .............................................................................................................. 2
1.2. Problem statement ........................................................................................................... 2
1.3. Objective ......................................................................................................................... 3
1.3.1 Scope ......................................................................................................................... 3
1.3.2 Limitation .................................................................................................................. 3
1.4. Assumptions .................................................................................................................... 3
2. Notatıon & Model Formulatıon ............................................................................................. 3
2.1. Inputs ............................................................................................................................... 3
2.2 Decision Variables ........................................................................................................... 4
2.3 Model completed .............................................................................................................. 6
3. Result ..................................................................................................................................... 7
3.1. 2013 ................................................................................................................................. 7
3.2. 2012 ............................................................................................................................... 11
3.3. 2011 ............................................................................................................................... 14
3.4. 2010 ............................................................................................................................... 17
3.5.2009 ................................................................................................................................ 21
3.6. 2008 ............................................................................................................................... 24
3.7.2007 ................................................................................................................................ 27
3.8. 2006 ............................................................................................................................... 30
4. Sensitivity analysis............................................................................................................... 34
4.1. Sensitivity report ........................................................................................................... 34
4.2. Test by shut down Japan and close one chemical in Germany ..................................... 34
5. Recommendation ................................................................................................................. 34
6. References ............................................................................................................................ 35
2
Abstract
Worldwide chemical production has become essential in modern life, one of the most famous
businesses can be known such as Biopharma. The case study offered two solutions for these:
close the manufacturing in Japan or restrict the use of chemicals in German products to
maximize profit for Biopharma. The method develops from decision making and linear
function which help to get the optimal solution. To obtain the best results, the model calls for
using prices, demand, rate currencies, and plant capacity. As a result, all variable expenses are
decreased, and annual fixed costs are reduced by 70% (plant closure costs make up the
remaining 30%).
1.Introduction
1.1. Current situation

The two key chemical patents held by BioPharma Inc., a leading global chemical company in
their sector, are Highcal and Relax. These substances are offered to other chemical producers
as well as their company's pharmaceutical division. The manufacture of Relax has now been
completed worldwide. Products were supplied in six major regions in 2013, and Biopharma
has predicted that, with the exception of Japan, sales can remain stable everywhere else in the
world. Before stabilizing, it is predicted that Japan's annual sales will rise by 15% during the
following five years. A leader in managing environmental and regulatory challenges is a plant
in Japan. In the worldwide network, Germany was among the countries with the highest yields
aside from that. The manufacturing technique and technology do, however, need to be
improved in Brazil, India, and Mexical.
1.2. Problem statement

From the information provided from the article, BioPharma Inc. is facing very serious
problems. The company's profits are plummeting, its manufacturing plants in Germany and
Japan have very high costs, and having excess capacity in the global production network,
overwhelming all of the company's other factory facilities. The company's president, Phil
Landgraf, recognizes that demand for the company's products is stable worldwide, but the
surplus capacity in the global production network is becoming financially burdensome. Cost-
cutting is a priority to improve financial performance.
3
1.3. Objective
1.3.1 Scope
Our objective of this work is based on two points:
- To design a more cost-effective network for the company.
- To analyze the pros and the cons of the improvements, which are recommended.
The goal of this project is to choose the optimal solution for the case study of a Biopharma
company. The team will base on given data such as Transportation Cost, History of Exchange
Rates in Currency, Import Tariffs, .. to calculate and choose whether keeping the global
network or replacing it with other plants will be more reasonable. This optimal solution must
meet the criteria of achieving the lowest price.
1.3.2 Limitation
This study has potential limitation because of limited data, calculation results may not be
close to reality and specific. Lack of available and/or reliable data -- a lack of data or of
reliable data will likely require us to limit the scope of your analysis, the size of this sample,
or it can be a significant obstacle in finding a trend and a meaningful relationship.
1.4. Assumptions
We assume that:
- The demand for the company’s sales for the two products will be stable for all parts of
the world, except for Asia without Japan
- In the region of Asia without Japan, sales are expected to grow by 15% annually for
five years consecutively before stabilizing
- In terms of output capacity, the German facility is a frontrunner. The plant consistently
produced the highest yields across the whole network.
4
2. Notatıon & Model Formulatıon
2.1.1 Inputs
𝑖: 𝑖𝑛𝑑𝑒𝑥 {1,2, … ,5} 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔 𝑡𝑜 𝑝𝑙𝑎𝑛𝑡 𝑖 [Brazil, Germany, India, Japan, Mexico, U.S.]
𝑗: 𝑖𝑛𝑑𝑒𝑥 {1,2, … ,5} 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔 𝑡𝑜 𝑝𝑙𝑎𝑛𝑡 𝑗 𝑖𝑛 𝑟𝑒𝑔𝑖𝑜𝑛 [Latin America, Europe, Asia
(w.o.) Japan, Mexico, U.S.]
A: Sub index that indicates product chemical Highcal
B: Sub index that indicates product Chemical Relax
Ki: Capacity of plants i (in million Kg)
Fi: Annualized fixed cost of keeping factory i open (in Millions $US)
FA_i: Annualized fixed cost related to idled for Produce A at factory i (independent of quantity
produced) (in Millions $US)
FB_i: Annualized fixed cost related to idled for Produce B at factory I (independent of quantity
produced) (in Millions $US)
CA_ij: Cost of producing and shipping product A from factory i to market region j (cost include
transportation, raw materials, and production) in $US/Kg
CB_ij: Cost of producing and shipping product B from factory i to market region j (cost include
transportation, raw materials, and production) in $US/Kg
DA_j: Annual demand of product A from market j (in million Kg)
DB_j: Annual demand of product B from market j (in million Kg)
Tj: Tariff of import product A or B to market j (Duties apply only to raw material, production
and transportation costs)
2.2 Decision Variables

XA_ij: Quantity of product A shipped from plant i to market j (in million Kg)
XB_ij: Quantity of product B shipped from plant i to market j (in million Kg)
Yi: 1 if plant i is open, 0 otherwise
YA_i: 1 if plant i is idled to produce product A, 0 otherwise (plant can be idled even not produce
nothing)
YB_i: 1 if plant i is idled to produce product B, 0 otherwise (plant can be idled even not produce
nothing)
In the case of a plant shutdown, the plan eliminates all variable expenses and saves 70%
of the annual fixed expense (the remaining 30% is used to pay for plant shutdown
expenses).
𝐹𝑖 × (0.3 + 0.7 × 𝑌𝑖 )
If a plant produces only one chemical (product A or B) it can save 70% of the fixed costs
related to that specific chemical.
𝐹𝐴𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐴𝑖 ) + 𝐹𝐵𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐵𝑖 )
So Total fixed cost is given by
5
∑ (𝐹𝑖 × (0.3 + 0.7 × 𝑌𝑖 ) + 𝐹𝐴𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐴𝑖 ) + 𝐹𝐵𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐵𝑖 ))
𝑗∈𝐽
According to regional trade agreements, import duties are set, and it is expected that local
production in each region won't lead to any import duties. provided that only the costs of
raw materials, production, and transportation are impacted by import duties, the total
variable cost is provided by:
∑ (𝐶𝐴𝑖𝑗 × 𝑋𝐴𝑖𝑗 × (1 + 𝑇𝑗 ) + 𝐶𝐵𝑖𝑗 × 𝑋𝐵𝑖𝑗 × (1 + 𝑇𝑗 ))

𝑖∈𝑙
i≠j
As long as the plant is able to produce both chemicals, the capacity of chemical A or B can be
given
∑ 𝑋𝐴𝑖𝑗 + 𝑋𝐵𝑖𝑗 ≤ 𝐾𝑖 × 𝑌𝑖 𝑓𝑜𝑟 ∀ 𝑖

𝑗∈𝐽
Demand constraint
∑ 𝑋𝐴𝑖𝑗 = 𝐷𝐴_𝑖𝑗 𝑓𝑜𝑟 ∀ 𝑗

𝑖∈𝑙
∑ 𝑋𝐵𝑖𝑗
𝑖∈𝑙
For secure 𝑋𝐴𝑖𝑗 to be 0 when 𝑌𝐴𝑖 = 0, and secure 𝑋𝐵𝑖𝑗 to be 0 when 𝑌𝐵𝑖 = 0
𝑋𝐴𝑖𝑗 ≤ 𝐷𝐴𝑗 × 𝑌𝐴𝑖 𝑓𝑜𝑟 ∀ 𝑖, 𝑗

𝑋𝐵𝑖𝑗 ≤ 𝐷𝐵𝑗 × 𝑌𝐵𝑖 𝑓𝑜𝑟 ∀ 𝑖, 𝑗
More constraints
𝑌𝑖 ≤ 𝑌𝐴𝑖 × 𝑌𝐵𝑖 𝑓𝑜𝑟 ∀ 𝑖
𝑌𝐴𝑖 ≤ 𝑌𝑖 𝑓𝑜𝑟 ∀ 𝑖
𝑌𝐵𝑖 ≤ 𝑌𝑖 𝑓𝑜𝑟 ∀ 𝑖
2.3 Model completed

Objective Function: Minimize Z: (total cost) (in million $US)
Minimize 𝑍 = ∑𝑗∈𝐽 (𝐹𝑖 × (0.3 + 0.7 × 𝑌𝑖 ) + 𝐹𝐴𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐴𝑖 ) +

𝐹𝐵𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐵𝑖 )) + ∑𝑗∈𝑙 (∑𝑖∈𝑙 𝐶𝐴𝑖𝑗 × 𝑋𝐴𝑖𝑗 × (1 + 𝑇𝑗 ) + 𝐶𝐷𝑖𝑗 × 𝑋𝐷𝑖𝑗 ×
(1 + 𝑇𝑗))
6
i≠j
Subject to:
∑ 𝑋𝐴𝑖𝑗 + 𝑋𝐵𝑖𝑗 ≤ 𝐾𝑖 × 𝑌𝑖 𝑓𝑜𝑟 ∀ 𝑖

𝑗∈𝐽
∑ 𝑋𝐴𝑖𝑗 = 𝐷𝐴_𝑖𝑗 𝑓𝑜𝑟 ∀ 𝑗

𝑖∈𝑙
∑ 𝑋𝐵𝑖𝑗
𝑖∈𝑙
𝑋𝐴𝑖𝑗 ≤ 𝐷𝐴𝑗 × 𝑌𝐴𝑖 𝑓𝑜𝑟 ∀ 𝑖, 𝑗
𝑋𝐵𝑖𝑗 ≤ 𝐷𝐵𝑗 × 𝑌𝐵𝑖 𝑓𝑜𝑟 ∀ 𝑖, 𝑗
𝑌𝑖 ≤ 𝑌𝐴𝑖 × 𝑌𝐵𝑖 𝑓𝑜𝑟 ∀ 𝑖
𝑌𝐵𝑖 ≤ 𝑌𝑖 𝑓𝑜𝑟 ∀ 𝑖
𝑌𝑖 ≤ 𝑌𝐴𝑖 + 𝑌𝐵𝑖 𝑓𝑜𝑟 ∀ 𝑖
𝑋𝐴𝑖𝑗 , 𝑋𝐵𝑖𝑗 ≥ 0 𝑓𝑜𝑟 ∀ 𝑖 , 𝑗
𝑌𝑖 , 𝑌𝐴𝑖 , 𝑌𝐵𝑖 ∈ {0,1} 𝑏𝑖𝑛𝑎𝑟𝑦 𝑓𝑜𝑟 ∀ 𝑖
Sources: Authors Calculation (2013)
With a Given Production the model add two more constraints

𝑃𝐴𝑖 : Production of product A at plants I (in million Kg)
𝑃𝐵𝑖 : Production of product B at plants I (in million Kg)
∑𝑃𝑗∈𝐽
𝐴𝑖
𝑋𝐴_𝑖𝑗 = 𝑃𝐴𝑖 × 𝑌𝐴𝑖 𝑓𝑜𝑟 ∀ i
∑𝑃𝑗∈𝐽
𝐵𝑖
𝑋𝐵𝑖𝑗 = 𝑃𝐵𝑖 × 𝑌𝐵𝑖 𝑓𝑜𝑟 ∀ i
7
3. Result
3.1. 2013
- Input 2013:
Exchange Rates
2013
Brazilian Real 2,15
Euro 0,75
Indian Rupee 58,44
Japanese Yen 97,58
Mexican Peso 12,75
U.S. Dollar 1,00
Fixed and variable costs for specified years

Highcal
Raw Highcal Relax Raw Relax
Plant Highcal Relax Material Production Material Production
Fixed Cost Fixed Cost Fixed Cost Cost Cost Cost Cost
Plant (Million $) (Million $) (Million $) ($/kg) ($/kg) ($/kg) ($/kg)
Brazil 20,0 5,0 5,0 3,6 5,1 4,6 6,6
Germany 45,0 13,0 13,0 3,9 6,0 5,0 7,0
India 14,0 3,0 3,0 3,6 4,5 4,5 6,0
Japan 13,0 4,0 4,0 3,9 6,0 5,1 7,0
Mexico 30,0 6,0 6,0 3,6 5,0 4,6 6,5
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5
Variable Material, Production and Transportation Cost for Highcal

Latin Europe Asia Japan Mexico U.S.
From / To America w/o Japan
Brazil 8,90 9,15 9,20 9,20 9,10 9,15
Germany 10,35 10,10 10,25 10,30 10,20 10,20
India 8,60 8,45 8,30 8,40 8,60 8,55
Japan 10,40 10,30 10,20 10,00 10,35 10,35
Mexico 9,00 8,90 9,10 9,05 8,80 8,85
U.S. 9,05 8,90 9,05 9,05 8,85 8,80
8
Variable Material, Production and Transportation Cost for Relax
Brazil 11,40 11,65 11,70 11,70 11,60 11,65
Germany 12,45 12,20 12,35 12,40 12,30 12,30
India 11,00 10,85 10,70 10,80 11,00 10,95
Japan 12,60 12,50 12,40 12,20 12,55 12,55
Mexico 11,50 11,40 11,60 11,55 11,30 11,35
U.S. 11,45 11,30 11,45 11,45 11,25 11,20
- Output 2013:
Fixed and Variable Costs at Current Exchange Rates
Total Variable Cost including Duties for Highcal

Highcal
Plant Fixed Highcal Relax Fixed Raw Highcal Relax Raw
Cost Fixed Cost Cost Material Production Material
Plant (Million $) (Million $) (Million $) Cost ($/kg) Cost ($/kg) Cost ($/kg)
Brazil 25,7 6,4 6,4 4,6 6,6 5,9
Germany 46,9 13,5 13,5 4,1 6,3 5,2
India 17,5 3,7 3,7 4,5 5,6 5,6
Japan 15,9 4,9 4,9 4,8 7,3 6,2
Mexico 30,8 6,2 6,2 3,7 5,1 4,7
U.S. 23,0 5,0 5,0 3,6 5,0 4,5
Total Variable Cost including Duties for Relax

Latin Asia
From / To America Europe w/o Japan Japan Mexico U.S.
Brazil 11,4 12,0 14,9 12,4 15,7 12,1
Germany 16,2 12,2 15,7 13,1 16,6 12,8
India 14,3 11,2 10,7 11,4 14,9 11,4
Japan 16,4 12,9 15,7 12,2 16,9 13,1
Mexico 15,0 11,7 14,7 12,2 11,3 11,8
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
9
Decision Variables
Plants Open / Shut, Lines On / Off

Plant Highcal Relax
Open (1) / On (1) / On (1) /
Plant Shut (0) Off (0) Off (1)
Brazil 1,0 1,0 1,0
Germany 1,0 0,0 1,0
India 1,0 1,0 1,0
Japan 0,0 0,0 0,0
Mexico 1,0 1,0 1,0
U.S. 1,0 1,0 1,0
Total cost = $ 1.267,18
Highcal Quantity Shipped From / To

Latin Asia
Brazil 7,0 4,0 0,0 0,0 0,0 0,0
Germany 0,0 0,0 0,0 0,0 0,0 0,0
India 0,0 0,0 5,0 7,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 11,0 0,0 0,0 3,0 13,0
U.S. 0,0 0,0 0,0 0,0 0,0 5,0
Relax Quantity Shipped From / To

Latin Asia
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 0,0 5,0 0,0 0,0
India 0,0 0,0 3,0 3,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 0,0 0,0 0,0 3,0 0,0
U.S. 0,0 0,0 0,0 0,0 0,0 17,0
10
Constraints
Capacity
Total
Plant Capacity Highcal Relax
Brazil 0,0 7,0 11,0
Germany 28,0 0,0 28,0
India 0,0 6,0 12,0
Japan 0,0 0,0 0,0
Mexico 0,0 3,0 27,0
U.S. 0,0 17,0 5,0
Demand
Latin Asia
Demand America Europe w/o Japan Japan Mexico U.S.
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
3.2. 2012
- Input 2012
Exchange Rates
2012
Brazilian Real 1,95
Euro 0,78
Indian Rupee 53,46
Japanese Yen 79,79
Mexican Peso 13,15
U.S. Dollar 1,00
11
Fixed and Variable Costs for Specified Year
Highcal
Plant Highcal Relax Raw Highcal Relax Raw Relax
Fixed Cost Fixed Cost Fixed Cost Material Production Material Production
Plant (Million $) (Million $) (Million $) Cost ($/kg) Cost ($/kg) Cost ($/kg) Cost ($/kg)
Brazil 22,1 5,5 5,5 4,0 5,6 5,1 7,3
Germany 43,3 12,5 12,5 3,8 5,8 4,8 6,7
India 15,3 3,3 3,3 3,9 4,9 4,9 6,6
Japan 15,9 4,9 4,9 4,8 7,3 6,2 8,6
Mexico 29,1 5,8 5,8 3,5 4,8 4,5 6,3
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5

Brazil 9,79 10,04 10,09 10,09 9,99 10,04
Germany 9,97 9,72 9,87 9,92 9,82 9,82
India 9,35 9,20 9,05 9,15 9,35 9,30
Japan 12,61 12,51 12,41 12,21 12,56 12,56
Mexico 8,74 8,64 8,84 8,79 8,54 8,59
U.S. 9,05 8,90 9,05 9,05 8,85 8,80

Brazil 12,55 12,80 12,85 12,85 12,75 12,80
Germany 11,99 11,74 11,89 11,94 11,84 11,84
India 11,98 11,83 11,68 11,78 11,98 11,93
Japan 15,30 15,20 15,10 14,90 15,25 15,25
Mexico 11,16 11,06 11,26 11,21 10,96 11,01
U.S. 11,45 11,30 11,45 11,45 11,25 11,20
12
- Output 2012

Latin Asia
Brazil 9,8 10,3 12,8 10,7 13,5 10,4
Germany 13,0 9,7 12,5 10,5 13,3 10,2
India 12,2 9,5 9,1 9,7 12,6 9,7
Japan 16,4 12,9 15,8 12,2 17,0 13,1
Mexico 11,4 8,9 11,2 9,3 8,5 8,9
U.S. 11,8 9,2 11,5 9,6 11,9 8,8

Latin Asia
Brazil 12,5 13,2 16,3 13,6 17,2 13,3
Germany 15,6 11,7 15,1 12,7 16,0 12,3
India 15,6 12,2 11,7 12,5 16,2 12,4
Japan 19,9 15,7 19,2 14,9 20,6 15,9
Mexico 14,5 11,4 14,3 11,9 11,0 11,5
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
Decision Variables

Plant Highcal Relax
Open (1) / On (1) / On (1) /
Brazil 1,0 1,0 1,0
Germany 1,0 0,0 1,0
India 1,0 1,0 1,0
Japan 0,0 0,0 0,0
Mexico 1,0 1,0 1,0
U.S. 1,0 1,0 0,0
Total cost = $ 1.267,18
13
Latin Asia
Brazil 7,0 4,0 0,0 0,0 0,0 0,0
Germany 0,0 0,0 0,0 0,0 0,0 0,0
India 0,0 0,0 5,0 7,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 11,0 0,0 0,0 3,0 13,0
U.S. 0,0 0,0 0,0 0,0 0,0 5,0

Latin Asia
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 0,0 5,0 0,0 0,0
India 0,0 0,0 3,0 3,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 0,0 0,0 0,0 3,0 0,0
U.S. 0,0 0,0 0,0 0,0 0,0 17,0
Constraints
Capacity
Total
Brazil 0,0 7,0 11,0
Germany 28,0 0,0 28,0
India 0,0 6,0 12,0
Japan 0,0 0,0 0,0
Mexico 0,0 3,0 27,0
U.S. 0,0 17,0 5,0
Demand
Latin Asia
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
14
3.3. 2011
- Input 2011
Exchange Rates
2011
Brazilian Real 1,67
Euro 0,72
Indian Rupee 46,85
Japanese Yen 79,70
Mexican Peso 12,42
U.S. Dollar 1,00

Highcal
Brazil 25,7 6,4 6,4 4,6 6,6 5,9 8,5
Germany 46,9 13,5 13,5 4,1 6,3 5,2 7,3
India 17,5 3,7 3,7 4,5 5,6 5,6 7,5
Japan 15,9 4,9 4,9 4,8 7,3 6,2 8,6
Mexico 30,8 6,2 6,2 3,7 5,1 4,7 6,7
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5

Brazil 11,40 11,65 11,70 11,70 11,60 11,65
Germany 10,76 10,51 10,66 10,71 10,61 10,61
India 10,60 10,45 10,30 10,40 10,60 10,55
Japan 12,62 12,52 12,42 12,22 12,57 12,57
Mexico 9,23 9,13 9,33 9,28 9,03 9,08
U.S. 9,05 8,90 9,05 9,05 8,85 8,80
15
Brazil 14,62 14,87 14,92 14,92 14,82 14,87
Germany 12,95 12,70 12,85 12,90 12,80 12,80
India 13,60 13,45 13,30 13,40 13,60 13,55
Japan 15,31 15,21 15,11 14,91 15,26 15,26
Mexico 11,79 11,69 11,89 11,84 11,59 11,64
U.S. 11,45 11,30 11,45 11,45 11,25 11,20
- Output 2011

Latin Asia
Brazil 11,4 12,0 14,9 12,4 15,7 12,1
Germany 14,0 10,5 13,5 11,4 14,3 11,0
India 13,8 10,8 10,3 11,0 14,3 11,0
Japan 16,4 12,9 15,8 12,2 17,0 13,1
Mexico 12,0 9,4 11,8 9,8 9,0 9,4
U.S. 11,8 9,2 11,5 9,6 11,9 8,8

Latin Asia
Brazil 14,6 15,3 18,9 15,8 20,0 15,5
Germany 16,8 12,7 16,3 13,7 17,3 13,3
India 17,7 13,9 13,3 14,2 18,4 14,1
Japan 19,9 15,7 19,2 14,9 20,6 15,9
Mexico 15,3 12,0 15,1 12,6 11,6 12,1
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
16
Decision Variables

Plant Highcal Relax
Open (1) / On (1) / On (1) /
Brazil 0,0 0,0 0,0
Germany 1,0 0,0 1,0
India 1,0 1,0 1,0
Japan 0,0 0,0 0,0
Mexico 1,0 1,0 1,0
U.S. 1,0 1,0 0,0
Total cost = $ 1.382,80

Latin Asia
Brazil 0,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 0,0 0,0 0,0 0,0 0,0
India 0,0 1,0 5,0 7,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 7,0 10,0 0,0 0,0 3,0 0,0
U.S. 0,0 4,0 0,0 0,0 0,0 18,0

Latin Asia
Brazil 0,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 0,0 8,0 0,0 17,0
India 0,0 0,0 3,0 0,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 7,0 0,0 0,0 0,0 3,0 0,0
U.S. 0,0 0,0 0,0 0,0 0,0 0,0
17
Constraints
Capacity
Total
Brazil 0,0 0,0 0,0
Germany 8,0 0,0 8,0
India 2,0 5,0 15,0
Japan 0,0 0,0 0,0
Mexico 0,0 10,0 20,0
U.S. 0,0 0,0 0,0
Demand
Latin Asia
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
3.4. 2010
- Input 2010
Exchange Rates
2010
Brazilian Real 1,75
Euro 0,75
Indian Rupee 45,72
Japanese Yen 87,78
Mexican Peso 12,63
U.S. Dollar 1,00
18
Highcal
Brazil 24,6 6,1 6,1 4,4 6,3 5,7 8,1
Germany 45,0 13,0 13,0 3,9 6,0 5,0 7,0
India 17,9 3,8 3,8 4,6 5,8 5,8 7,7
Japan 14,5 4,4 4,4 4,3 6,7 5,7 7,8
Mexico 30,3 6,1 6,1 3,6 5,0 4,6 6,6
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5

Brazil 10,89 11,14 11,19 11,19 11,09 11,14
Germany 10,35 10,10 10,25 10,30 10,20 10,20
India 10,85 10,70 10,55 10,65 10,85 10,80
Japan 11,51 11,41 11,31 11,11 11,46 11,46
Mexico 9,08 8,98 9,18 9,13 8,88 8,93
U.S. 9,05 8,90 9,05 9,05 8,85 8,80

Brazil 13,96 14,21 14,26 14,26 14,16 14,21
Germany 12,45 12,20 12,35 12,40 12,30 12,30
India 13,92 13,77 13,62 13,72 13,92 13,87
Japan 13,95 13,85 13,75 13,55 13,90 13,90
Mexico 11,61 11,51 11,71 11,66 11,41 11,46
U.S. 11,45 11,30 11,45 11,45 11,25 11,20
19
- Output 2010
Latin Asia
Brazil 10,9 11,5 14,2 11,9 15,0 11,6
Germany 13,5 10,1 13,0 10,9 13,8 10,6
India 14,1 11,0 10,6 11,3 14,7 11,2
Japan 15,0 11,7 14,4 11,1 15,5 11,9
Mexico 11,8 9,3 11,7 9,7 8,9 9,3
U.S. 11,8 9,2 11,5 9,6 11,9 8,8

Latin Asia
Brazil 14,0 14,6 18,1 15,1 19,1 14,8
Germany 16,2 12,2 15,7 13,1 16,6 12,8
India 18,1 14,2 13,6 14,5 18,8 14,4
Japan 18,1 14,3 17,5 13,6 18,8 14,5
Mexico 15,1 11,9 14,9 12,4 11,4 11,9
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
Decision Variables

Plant Highcal Relax
Open (1) / On (1) / On (1) /
Brazil 1,0 1,0 1,0
Germany 1,0 0,0 1,0
India 0,0 0,0 0,0
Japan 0,0 0,0 0,0
Mexico 1,0 1,0 1,0
U.S. 1,0 1,0 0,0
Total cost = $ 1.351,19
20
Latin Asia
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 0,0 0,0 0,0 0,0 0,0
India 0,0 0,0 0,0 0,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 15,0 1,0 7,0 3,0 0,0
U.S. 0,0 0,0 4,0 0,0 0,0 18,0

Latin Asia
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 3,0 8,0 0,0 16,0
India 0,0 0,0 0,0 0,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 0,0 0,0 0,0 3,0 1,0
U.S. 0,0 0,0 0,0 0,0 0,0 0,0
Constraints
Capacity
Total
Brazil 4,0 11,0 11,0
Germany 6,0 0,0 6,0
India 0,0 0,0 0,0
Japan 0,0 0,0 0,0
Mexico 0,0 4,0 26,0
U.S. 0,0 0,0 0,0
Demand
Latin Asia
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
3.5.2009
- Input 2009
21
Exchange Rates
2009
Brazilian Real 1,99
Euro 0,72
Indian Rupee 48,42
Japanese Yen 93,58
Mexican Peso 13,48
U.S. Dollar 1,00

Highcal
Brazil 21,6 5,4 5,4 3,9 5,5 5,0 7,1
Germany 46,9 13,5 13,5 4,1 6,3 5,2 7,3
India 16,9 3,6 3,6 4,3 5,4 5,4 7,2
Japan 13,6 4,2 4,2 4,1 6,3 5,3 7,3
Mexico 28,4 5,7 5,7 3,4 4,7 4,4 6,1
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5

Brazil 9,60 9,85 9,90 9,90 9,80 9,85
Germany 10,76 10,51 10,66 10,71 10,61 10,61
India 10,28 10,13 9,98 10,08 10,28 10,23
Japan 10,82 10,72 10,62 10,42 10,77 10,77
Mexico 8,53 8,43 8,63 8,58 8,33 8,38
U.S. 9,05 8,90 9,05 9,05 8,85 8,80
22
Brazil 12,30 12,55 12,60 12,60 12,50 12,55
Germany 12,95 12,70 12,85 12,90 12,80 12,80
India 13,17 13,02 12,87 12,97 13,17 13,12
Japan 13,12 13,02 12,92 12,72 13,07 13,07
Mexico 10,90 10,80 11,00 10,95 10,70 10,75
U.S. 11,45 11,30 11,45 11,45 11,25 11,20
- Output 2009
Fixed and Variable Costs at Current Exchange Rates:

Latin Asia
Brazil 9,6 10,1 12,6 10,5 13,2 10,2
Germany 14,0 10,5 13,5 11,4 14,3 11,0
India 13,4 10,4 10,0 10,7 13,9 10,6
Japan 14,1 11,0 13,5 10,4 14,5 11,2
Mexico 11,1 8,7 11,0 9,1 8,3 8,7
U.S. 11,8 9,2 11,5 9,6 11,9 8,8

Latin Asia
Brazil 12,3 12,9 16,0 13,4 16,9 13,1
Germany 16,8 12,7 16,3 13,7 17,3 13,3
India 17,1 13,4 12,9 13,8 17,8 13,6
Japan 17,1 13,4 16,4 12,7 17,6 13,6
Mexico 14,2 11,1 14,0 11,6 10,7 11,2
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
23
Decision Variables

Plant Highcal Relax
Open (1) / On (1) / On (1) /
Brazil 1,0 1,0 1,0
Germany 1,0 0,0 1,0
India 1,0 1,0 1,0
Japan 0,0 0,0 0,0
Mexico 1,0 1,0 1,0
U.S. 1,0 1,0 0,0
Total cost= $1.313,76

Latin Asia
Brazil 7,0 4,0 0,0 0,0 0,0 0,0
Germany 0,0 0,0 0,0 0,0 0,0 0,0
India 0,0 3,0 5,0 7,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 4,0 0,0 0,0 3,0 0,0
U.S. 0,0 4,0 0,0 0,0 0,0 18,0

Latin Asia
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 0,0 5,0 0,0 0,0
India 0,0 0,0 3,0 0,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 0,0 0,0 3,0 3,0 17,0
U.S. 0,0 0,0 0,0 0,0 0,0 0,0
Constraints
24
Capacity
Total
Brazil 0,0 7,0 11,0
Germany 28,0 0,0 28,0
India 0,0 3,0 15,0
Japan 0,0 0,0 0,0
Mexico 0,0 23,0 7,0
U.S. 0,0 0,0 0,0
Demand
Latin Asia
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
3.6. 2008
- Input 2008
Exchange Rates
2008
Brazilian Real 1,83
Euro 0,68
Indian Rupee 43,62
Japanese Yen 103,42
Mexican Peso 11,13
U.S. Dollar 1,00
25
Highcal
Brazil 23,5 5,9 5,9 4,2 6,0 5,4 7,8
Germany 49,6 14,3 14,3 4,3 6,6 5,5 7,7
India 18,8 4,0 4,0 4,8 6,0 6,0 8,0
Japan 12,3 3,8 3,8 3,7 5,7 4,8 6,6
Mexico 34,4 6,9 6,9 4,1 5,7 5,3 7,4
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5

Latin Asia
Brazil 10,4 10,7 10,7 10,7 10,6 10,7
Germany 11,4 11,1 11,3 11,3 11,2 11,2
India 11,4 11,2 11,1 11,2 11,4 11,3
Japan 9,8 9,7 9,6 9,4 9,8 9,8
Mexico 10,3 10,2 10,4 10,3 10,1 10,1
U.S. 9,1 8,9 9,1 9,1 8,9 8,8

Latin Asia
Brazil 13,4 13,6 13,7 13,7 13,6 13,6
Germany 13,7 13,4 13,6 13,6 13,5 13,5
India 14,6 14,4 14,3 14,4 14,6 14,5
Japan 11,9 11,8 11,7 11,5 11,9 11,9
Mexico 13,1 13,0 13,2 13,2 12,9 13,0
U.S. 11,5 11,3 11,5 11,5 11,3 11,2
- Output 2008
26

Latin Asia
Brazil 10,4 11,0 13,6 11,4 14,3 11,1
Germany 14,8 11,1 14,3 12,0 15,1 11,7
India 14,8 11,5 11,1 11,8 15,3 11,8
Japan 12,8 10,0 12,2 9,4 13,2 10,2
Mexico 13,3 10,5 13,1 10,9 10,1 10,5
U.S. 11,8 9,2 11,5 9,6 11,9 8,8

Latin Asia
Brazil 13,4 14,0 17,3 14,5 18,3 14,2
Germany 17,8 13,4 17,3 14,5 18,3 14,1
India 18,9 14,8 14,3 15,2 19,7 15,1
Japan 15,5 12,2 14,9 11,5 16,0 12,3
Mexico 17,1 13,4 16,8 14,0 12,9 13,5
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
Decision Variables

Plant Highcal Relax
Open (1) / On (1) / On (1) /
Brazil 1,0 1,0 1,0
Germany 1,0 0,0 1,0
India 1,0 1,0 1,0
Japan 1,0 0,0 1,0
Mexico 1,0 1,0 1,0
U.S. 1,0 1,0 1,0
Total cost = $1.423,16
27
Latin Asia
Brazil 7,0 2,0 0,0 2,0 0,0 0,0
Germany 0,0 0,0 0,0 0,0 0,0 0,0
India 0,0 0,0 5,0 5,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 13,0 0,0 0,0 3,0 11,0
U.S. 0,0 0,0 0,0 0,0 0,0 7,0

Latin Asia
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 0,0 0,0 0,0 0,0
India 0,0 0,0 3,0 0,0 0,0 0,0
Japan 0,0 0,0 0,0 8,0 0,0 2,0
Mexico 0,0 0,0 0,0 0,0 3,0 0,0
U.S. 0,0 0,0 0,0 0,0 0,0 15,0
Constraints
Capacity
Total
Brazil 0,0 7,0 11,0
Germany 33,0 0,0 33,0
India 5,0 8,0 15,0
Japan 0,0 0,0 0,0
Mexico 0,0 3,0 27,0
U.S. 0,0 15,0 7,0
Demand
Latin Asia
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
3.7.2007
- Input 2007
Exchange Rates
28
2007
Brazilian Real 1,94
Euro 0,73
Indian Rupee 41,34
Japanese Yen 117,77
Mexican Peso 10,92
U.S. Dollar 1,00

Highcal
Brazil 20,0 5,0 5,0 3,6 5,1 4,6 6,6
Germany
45,0 13,0 13,0 3,9 6,0 5,0 7,0
India 14,0 3,0 3,0 3,6 4,5 4,5 6,0
Japan 13,0 4,0 4,0 3,9 6,0 5,1 7,0
Mexico 30,0 6,0 6,0 3,6 5,0 4,6 6,5
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5

Brazil 9,84 10,09 10,14 10,14 10,04 10,09
Germany 10,62 10,37 10,52 10,57 10,47 10,47
India 11,95 11,80 11,65 11,75 11,95 11,90
Japan 8,70 8,60 8,50 8,30 8,65 8,65
Mexico 10,44 10,34 10,54 10,49 10,24 10,29
U.S. 9,05 8,90 9,05 9,05 8,85 8,80
29
Brazil 12,61 12,86 12,91 12,91 12,81 12,86
Germany 12,78 12,53 12,68 12,73 12,63 12,63
India 15,34 15,19 15,04 15,14 15,34 15,29
Japan 10,53 10,43 10,33 10,13 10,48 10,48
Mexico 13,36 13,26 13,46 13,41 13,16 13,21
U.S. 11,45 11,30 11,45 11,45 11,25 11,20
- Output 2007

Latin Asia
Brazil 9,8 10,4 12,9 10,8 13,6 10,5
Germany 13,8 10,4 13,4 11,2 14,1 10,9
India 15,5 12,2 11,7 12,5 16,1 12,4
Japan 11,3 8,9 10,8 8,3 11,7 9,0
Mexico 13,6 10,7 13,4 11,1 10,2 10,7
U.S. 11,8 9,2 11,5 9,6 11,9 8,8

Latin Asia
Brazil 12,6 13,2 16,4 13,7 17,3 13,4
Germany 16,6 12,5 16,1 13,5 17,0 13,1
India 19,9 15,6 15,0 16,1 20,7 15,9
Japan 13,7 10,7 13,1 10,1 14,1 10,9
Mexico 17,4 13,7 17,1 14,2 13,2 13,7
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
Decision Variables
30
Plant Highcal Relax
Open (1) / On (1) / On (1) /
Brazil 1,0 1,0 1,0
Germany 1,0 0,0 1,0
India 0,0 0,0 0,0
Japan 1,0 0,0 1,0
Mexico 1,0 1,0 1,0
U.S. 1,0 1,0 0,0
Total cost = $ 1.377,04

Latin Asia
Brazil 7,0 0,0 1,0 3,0 0,0 0,0
Germany 0,0 0,0 0,0 0,0 0,0 0,0
India 0,0 0,0 0,0 0,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 15,0 0,0 4,0 3,0 0,0
U.S. 0,0 0,0 4,0 0,0 0,0 18,0

Latin Asia
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 1,0 0,0 0,0 17,0
India 0,0 0,0 0,0 0,0 0,0 0,0
Japan 0,0 0,0 2,0 8,0 0,0 0,0
Mexico 0,0 0,0 0,0 0,0 3,0 0,0
U.S. 0,0 0,0 0,0 0,0 0,0 0,0
Constraints
31
Capacity
Total
Brazil 0,0 7,0 11,0
Germany 15,0 0,0 15,0
India 0,0 0,0 0,0
Japan 0,0 0,0 0,0
Mexico 5,0 8,0 27,0
U.S. 0,0 0,0 0,0
Demand
Latin Asia
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
3.8. 2006
- Input 2006
Exchange Rates
2006
Brazilian Real 2,17
Euro 0,80
Indian Rupee 45,18
Japanese Yen 116,29
Mexican Peso 10,89
U.S. Dollar 1,00
Fixed and Variable Production Costs by Plant at 2013 exchange rates
32
Highcal
Brazil 20,0 5,0 5,0 3,6 5,1 4,6 6,6
Germany
45,0 13,0 13,0 3,9 6,0 5,0 7,0
India 14,0 3,0 3,0 3,6 4,5 4,5 6,0
Japan 13,0 4,0 4,0 3,9 6,0 5,1 7,0
Mexico 30,0 6,0 6,0 3,6 5,0 4,6 6,5
U.S. 23,0 5,0 5,0 3,6 5,0 4,5 6,5

Brazil 8,82 9,07 9,12 9,12 9,02 9,07
Germany 9,73 9,48 9,63 9,68 9,58 9,58
India 10,98 10,83 10,68 10,78 10,98 10,93
Japan 8,81 8,71 8,61 8,41 8,76 8,76
Mexico 10,47 10,37 10,57 10,52 10,27 10,32
U.S. 9,05 8,90 9,05 9,05 8,85 8,80

Brazil 11,30 11,55 11,60 11,60 11,50 11,55
Germany 11,70 11,45 11,60 11,65 11,55 11,55
India 14,08 13,93 13,78 13,88 14,08 14,03
Japan 10,65 10,55 10,45 10,25 10,60 10,60
Mexico 13,40 13,30 13,50 13,45 13,20 13,25
U.S. 11,45 11,30 11,45 11,45 11,25 11,20
- Output 2006
33

Latin Asia
Brazil 8,8 9,3 11,6 9,7 12,2 9,4
Germany 12,7 9,5 12,2 10,3 12,9 10,0
India 14,3 11,2 10,7 11,4 14,8 11,4
Japan 11,4 9,0 10,9 8,4 11,8 9,1
Mexico 13,6 10,7 13,4 11,2 10,3 10,7
U.S. 11,8 9,2 11,5 9,6 11,9 8,8

Latin Asia
Brazil 11,3 11,9 14,7 12,3 15,5 12,0
Germany 15,2 11,5 14,7 12,3 15,6 12,0
India 18,3 14,3 13,8 14,7 19,0 14,6
Japan 13,8 10,9 13,3 10,3 14,3 11,0
Mexico 17,4 13,7 17,1 14,3 13,2 13,8
U.S. 14,9 11,6 14,5 12,1 15,2 11,2
Decision Variables

Plant Highcal Relax
Open (1) / On (1) / On (1) /
Brazil 1,0 1,0 1,0
Germany 1,0 1,0 1,0
India 1,0 1,0 1,0
Japan 1,0 0,0 1,0
Mexico 0,0 0,0 0,0
U.S. 1,0 1,0 0,0
Total cost = $1.292,65
34
Latin Asia
Brazil 7,0 0,0 0,0 4,0 0,0 0,0
Germany 0,0 15,0 0,0 0,0 0,0 0,0
India 0,0 0,0 5,0 2,0 0,0 0,0
Japan 0,0 0,0 0,0 0,0 0,0 0,0
Mexico 0,0 0,0 0,0 0,0 0,0 0,0
U.S. 0,0 0,0 0,0 1,0 3,0 18,0

Latin Asia
From / To America Europe ơw/o Japan Japan Mexico U.S.
Brazil 7,0 0,0 0,0 0,0 0,0 0,0
Germany 0,0 12,0 0,0 0,0 1,0 17,0
India 0,0 0,0 3,0 0,0 0,0 0,0
Japan 0,0 0,0 0,0 8,0 2,0 0,0
Mexico 0,0 0,0 0,0 0,0 0,0 0,0
U.S. 0,0 0,0 0,0 0,0 0,0 0,0
Constraints
Capacity
Total
Brazil 0,0 7,0 11,0
Germany 0,0 30,0 15,0
India 8,0 11,0 15,0
Japan 0,0 0,0 0,0
Mexico 0,0 0,0 0,0
U.S. 0,0 0,0 0,0
Demand
Latin Asia
Highcal 0,0 0,0 0,0 0,0 0,0 0,0
Relax 0,0 0,0 0,0 0,0 0,0 0,0
Growth 1
35
4. Sensitivity analysis
4.1. Sensitivity report

After the problem is solved, the answer depends on the values that are provided for the model,
and because they are variables, it is crucial to understand how the solution will change as the
input variables fluctuate. We wish to perform a sensitivity analysis for that reason. Sensitivity
analysis enables us to understand the decision-making-critical shadow pricing, optimality
range, and range of feasibility
- From the total profit the Japanese plant should be shut down since India's fixed and
variable costs are far lower and it is more cost-effective for them to be able to meet
demand. Due to their higher price than relax chemicals, high-cal chemicals should also
be eliminated from the German factory.The entire cost of the proposal is stated above
and includes all taxes for international shipping.
- The most cost-efficient factory for Biopharma Inc. appears to be in India. The lowest
fixed costs, variable costs, and chemical costs are all found at this plant. However, if
some money is spent, the facility can produce more to supply the Asian market, despite
the fact that it lacks the newest technology and sophisticated equipment. The need to
ship chemical products from Europe would disappear if Asia's capability were to be
boosted. Adding more plants in Asia would therefore inevitably result in cost-effective
profits.
- As can be seen, the profit mostly decreased through seven years because of the
shutdown of Japan and the production of one chemical in Germany. However, it also
reduces a large fixed and variable cost.
- It depends on the cost every year to decide whether to shut down or open any plant,
from that decision we will choose the lowest plant's transportation cost to get a target
product.
4.2. Test by shut down Japan and close one chemical in Germany
According to the test, open (1), shut down (0) while applying for a calculation. The data
indicates that Highcal production was halted in Germany and the Japan factory was
closed. Because we cut the profit from one facility and one chemical, the profit fell
during those times. It did, however, save a sizable sum of money and had to lower the
pricing in Japan, where the variable costs were the highest. Since the variable cost in
India was cheaper, it is the best option for transporting or exporting goods to locations
where the facility was shut down or had a restricted supply of chemicals.
36
5. Recommendation
- Consolidation of Plants: BioPharma should consider closing down the Japanese plant
and the outdated plants in Brazil, India, or Mexico. This will eliminate excess capacity
and reduce fixed costs associated with these plants. The Japanese plant can transfer its
technological expertise to other plants before closure. The consolidation should be done
strategically to ensure that the remaining plants have the necessary capabilities to meet
regional demands.
- Manufacturing: Once a medicine has received regulatory agency approval, it must be
produced on a large scale to satisfy market demand. To make sure that their products
adhere to regulatory requirements and are secure for patients, pharmaceutical
businesses must establish reliable production procedures and quality control
frameworks.
- Pharmaceutical items need to be distributed to patients and healthcare professionals all
over the world when they are manufactured. as well as partnerships with healthcare
organizations to guarantee that patientThis entails creating supply chain strategies to
guarantee prompt and effective drug deliveries have access to the supplies they require.
- Pharmaceutical businesses are subject to a variety of regulatory regulations in various
nations across the world. To do this, new drugs must gain regulatory approval, adhere
to good manufacturing practices (GMP) and other quality standards, and follow local
laws governing the distribution and sale of pharmaceuticals.
- Intellectual property rights must be protected by pharmaceutical companies in order for
them to continue investing in R&D and bring new medications to market. These rights
include patents and trademarks.
37
6. References
[1] "The Irrationality of Action and Action Ratio- nality: Decisions, Ideologies and
Organizational Actions," Jour- nal of Management Studies
[2]Burgelman, Robert (1983), "A Process Model of Internal Corporate Venturing in the
Diversified Major Firm,"
[3]Processes," Academy of Management Review, 10, 496-503.
[4]McNamara, G., P. Bromiley. 1997. Decision making in an organizational setting:
Cognitive and organizational
[5]influences on risk as- sessment in commercial lending. Acad. Management J.
[6]Ryan, A. M., L. McFarland, H. Baron, R. Page. 1999. An international look at selection
practices: Nation and culture as explanations for variability in practice. Personnel Psych.
[7] Controlling decision making practice in organizations. Organization Science
[8] The use of modular organizational forms: An industry-level analysis.
[9] "Varieties of Administrative Decisions," in H. A. Leavitt and L. R. Pondy (Eds.)
[10] Decision Making at the Top: The Shaping of Strategic Direction,
INDIVIDUAL CONTRIBUTION IN GROUP

(done by students)
No. Full name of students ID Percentage
Phan Thảo Nghi

1 IELSIU20362 100%
2 Lê Ngọc Uyển Như IEIEIU19063 85%
3 Trần Kim Thành IELSIU20216 100%
4 Trương Cao Mỹ Tú IELSIU20224 95%
38

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INTERNATIONAL UNIVERSITY

SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

Lecturer: Nguyễn Văn Hợp

Class: Logistic Engineering and Supply Chain Design_S2_2022-23_G19

1.1. Current situation

1.2. Problem statement

2.2 Decision Variables

𝐹𝐴𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐴𝑖 ) + 𝐹𝐵𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐵𝑖 )

So Total fixed cost is given by

∑ (𝐶𝐴𝑖𝑗 × 𝑋𝐴𝑖𝑗 × (1 + 𝑇𝑗 ) + 𝐶𝐵𝑖𝑗 × 𝑋𝐵𝑖𝑗 × (1 + 𝑇𝑗 ))

∑ 𝑋𝐴𝑖𝑗 + 𝑋𝐵𝑖𝑗 ≤ 𝐾𝑖 × 𝑌𝑖 𝑓𝑜𝑟 ∀ 𝑖

∑ 𝑋𝐴𝑖𝑗 = 𝐷𝐴_𝑖𝑗 𝑓𝑜𝑟 ∀ 𝑗

𝑋𝐴𝑖𝑗 ≤ 𝐷𝐴𝑗 × 𝑌𝐴𝑖 𝑓𝑜𝑟 ∀ 𝑖, 𝑗

2.3 Model completed

Minimize 𝑍 = ∑𝑗∈𝐽 (𝐹𝑖 × (0.3 + 0.7 × 𝑌𝑖 ) + 𝐹𝐴𝑖 × (0.3 × 𝑌𝑖 + 0.7 × 𝑌𝐴𝑖 ) +

∑ 𝑋𝐴𝑖𝑗 + 𝑋𝐵𝑖𝑗 ≤ 𝐾𝑖 × 𝑌𝑖 𝑓𝑜𝑟 ∀ 𝑖

∑ 𝑋𝐴𝑖𝑗 = 𝐷𝐴_𝑖𝑗 𝑓𝑜𝑟 ∀ 𝑗

Sources: Authors Calculation (2013)

With a Given Production the model add two more constraints

Japanese Yen 97,58

Mexican Peso 12,75

U.S. Dollar 1,00

Fixed and variable costs for specified years

Variable Material, Production and Transportation Cost for Highcal

Fixed and Variable Costs at Current Exchange Rates

Total Variable Cost including Duties for Highcal

Total Variable Cost including Duties for Relax

Plants Open / Shut, Lines On / Off

Total cost = $ 1.267,18

Highcal Quantity Shipped From / To

Relax Quantity Shipped From / To

Japanese Yen 79,79

Mexican Peso 13,15

U.S. Dollar 1,00

Variable Material, Production and Transportation Cost for Highcal

Variable Material, Production and Transportation Cost for Relax

Fixed and Variable Costs at Current Exchange Rates

Total Variable Cost including Duties for Highcal

Total Variable Cost including Duties for Relax

Plants Open / Shut, Lines On / Off

Total cost = $ 1.267,18

Relax Quantity Shipped From / To

Japanese Yen 79,70

Mexican Peso 12,42

U.S. Dollar 1,00

Fixed and variable costs for specified years

Variable Material, Production and Transportation Cost for Highcal

Fixed and Variable Costs at Current Exchange Rates

Total Variable Cost including Duties for Highcal

Total Variable Cost including Duties for Relax

Plants Open / Shut, Lines On / Off

Total cost = $ 1.382,80

Highcal Quantity Shipped From / To

Relax Quantity Shipped From / To

Japanese Yen 87,78

Mexican Peso 12,63

U.S. Dollar 1,00

Variable Material, Production and Transportation Cost for Highcal