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The ABC Tool company is considering the best manufacturing location decision for manufacturing their ...

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The ABC Tool company is considering the best manufacturing location decision for manufacturing their ...

The ABC Tool company is considering the best manufacturing location decision for manufacturing their range of PowerDrills. The 3 options are to manufacture in the USA (current scenario), outsource manufacturing to either China or India. The cost to manufacture the product in the USA location (including all overhead costs) is $50 per unit, whereas the same cost for the China and India locations are $33 per unit and $30 per unit respectively. A container can hold 1000 units and it costs $10,000 to ship a container from China to USA and $11,200 to ship a container from India to USA. Additional inventory carrying costs incurred on account of the China and India locations are $1 and $1.35 per unit respectively. Additional logistics costs (on account of customs duties and related delays) are $2 and $2.5 for the China and India locations respectively. Determine the best (lowest cost) location to manufacture the PowerDrill product line.

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Managing Supply Chain and Operations: An Integrative Approach

Edition: 1^st

Authors: Foster, Sampson, Wallin, Webb

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