You are doing research on where to produce a new component for your product to be sold in the United States. You developed the following table capture the information provided by your company’s point of contact in each location:

Country: Daily Wage Laborers Production

Vietnam 112,500 Dong 8 50 units

China 45.5 Yuan 10 60 units

Mexico 740 Pesos 3 120 units

(explanation: 8 laborers in Vietnam working 1 week make 50 units)

Assumptions: Workers in each country work 5 days a week.

The exchange rates are as follows (note, these numbers are close to the real exchange rates):

$1 = 22,500 Dong

$1 = 6.5 Yuan

$1 = 18.5 Mexican Peso

a. Based solely on wages, which is the best location to produce the component?

Analysis of Vietnam _______

Analysis of China _______

Analysis of Mexico _______

Best Location _______________

b. The transportation costs are as follows. How does that change your analysis?

Vietnam 27,000,000 Dong for 300 units

China: 3,900 Yuan for 1,000 units

Mexico 18.5 pesos per unit

Analysis of Vietnam _______

Analysis of China _______

Analysis of Mexico _______

Best Location _______________

c. The United States decides to put a $1 per unit tariff, which will affect Vietnam and China, but will not affect Mexico as they are part of NAFTA. How does that affect your analysis?

Analysis of Vietnam _______

Analysis of China _______

Analysis of Mexico _______

Best Location _______________