Suppose that a manufacturer of men’s shirts can produce a dress tee shirt in its Harrisburg, Texas grow for $8 per t-shirt (including the price tag on raw materials).
Chicago is a major marketplace for 75, 000 t shirts per year. The shirt costs $15 at the Houston grow. Transportation and storage costs from Houston to Chi town amount to $5 per hundredweight (cwt. ). Each manufactured shirt weighs about 1 pound.
As an alternative, the company can have the shirts manufactured in Taiwan for $4 per shirt (including the cost of organic materials). The raw materials, considering about one particular pound every shirt, will be shipped from Houston to Taiwan at a cost of $2 every cwt. When the shirts happen to be completed, they are to be transported directly to Chicago at a transportation and storage expense of $6 every cwt. A great import work of $0.
50 every shirt is definitely assessed. a. From a logistics-production expense standpoint, if the shirts end up being produced in Taiwan? b. What additional things to consider, other than economic ones, might be considered before making a final decision?