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Andrew-Carter, Inc Andrew—Carter, Inc. {AL—C), is a major Canadian producer and distributor of outdoor lighting fixtures. Its
products are distributed throughout South and North America and have been in high demand for several years. The companyr operates three plants to manufacture fixtures and distribute them to 5 distribution centers (warehouses). During the present global slowdown, A—C has seen a major drop in demand for its products, larger because the housing market has declined. Based on the forecast of interest rates, the head of operations
feels that demand for housing and thus for A—C’s products will remain depressed for the foreseeable future. A—C is considering closing one of its plants, as it is now operating with a forecast excess capacity of 34,000 units per week. The forecast weekly,r demands for the coming year are as follows: Warehouse 1 9,000 units
Warehouse 2 13,000
Warehouse 3 11,000
Warehouse 4 15,000
Warehouse 5 0,000 Plant capacities, in units per week, are as follows: Plant 1, regular time 27,000 units
Plant 1, on overtime 2,000 Plant 2, regular time 20,000
Plant 2, on overtime 5,000 Plant 3, regular time 25,000
Plant 3 on overtime 6,000 If A—C shuts down any plants, its weekly costs will change, because fixed costs will be lower for a nonoperating plant. Table 1 shows production costs at each plant, both variable at regular time and
overtime, and fixed when operating and shut down. Table 2 shows distribution costs from each plant to each distribution center. Table 1Andrew-Carter, Inc., variable costs and fixed production costs per week Variable costs (per Fixed cost per week
.s 1, regular time $2.8 $14,000 $5,000
1, overtime 3.52 2, overtime 3.48
3, regular time 2.72 15,000 7,500 ———— Table 2 Andrew-Carter; Inc., Distribution costs per unit

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