how would your analysis change if newsprint demand followed the pessimistic projection

INSTRUCTIONS TO CANDIDATES

ANSWER ALL QUESTIONS

1. What is Northwest’s overall objective? What are the decision variables? What type of constraints do we need to consider?

2. Formulate a LP model and obtain a solution that maximizes profit. Keep in mind that according to the case each mill must operate at least six days out of seven. How does your solution differ from the original allocation given in Exhibit 4? What are the benefits of this optimization?

3. Can Northwest save money through freight rate discounts on volumes larger than 100,000 tons? If so, how much?

4. What strategic alternatives should Northwest consider with respect to the current newsprint capacity? Should a 58,000 ton/year machine at Naomee Mills be converted to groundwood specialties? Why or why not?

5. Can you recommend specific “delivery swap” arrangements to improve Northwest’s profitability?

6. Should Northwest build a new mill in Georgia? Under what conditions, if any, should this project be undertaken?

7. How would your analysis change if newsprint demand followed the pessimistic projection? How would it change under the optimistic projection?

Attachments:

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