# Use the data in the case study to calculate the three-year cost for each of the options

Use the data in the case study to calculate the three-year cost for each of the options 150 150 Affordable Capstone Projects Written from Scratch

Answer the following question.

1. 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 Israel 10 10.78 1 0.75 0 6 Israel expansion 10 10.78 1 0.75 2 2.5 Jordan 8 1.05 1 0.75 4.5 3.5 Singapore 8 9.19 0.5 1.5 6 3 China 7 0.50 0.5 1.5 6.5 4

Assumptions:

1. The demand of 8-million applies to each of the next three years.
2. K&S will produce to meet demand.
3. Capacity will be greater than 8 million. So K&S will have to decide where to meet that demand from.
4. 83% of demand is in Asia and 17% from the rest of the world (relevant because of differences in shipping costs)
5. 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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