Answer the following question.
- Use the data in the case study to calculate the three-year cost for each of the options. (30 marks)
|Country||Efficiency (units / worker / hour)||Average Hourly Wage||Unit Shipping Cost to Asia||Unit Shipping Cost to US and Other||Investment cost in $US million||Capacity (million units)||Manufacturing Cost / Unit||Total Unit Cost to Asia||Total Unit Cost to US and Other||3-year cost|
- The demand of 8-million applies to each of the next three years.
- K&S will produce to meet demand.
- Capacity will be greater than 8 million. So K&S will have to decide where to meet that demand from.
- 83% of demand is in Asia and 17% from the rest of the world (relevant because of differences in shipping costs)
- For Singapore, Jordan and China, it makes sense to utilize their full capacity (because of lower unit cost to Asia) and supply the balance from Israel.
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