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Problem 1: When entering markets in a region, you should always choose the country with the lowest manufacturing costs for local production.
Option 1: True
Option 2: False
Problem 2: Current cost to source from the home plant to Country A is $0.55 per unit, plus $0.02 in shipping (there is no tariff). If product is sourced from Country B, manufacturing cost is expected to be 20% lower; but shipping will increase to $0.06, and there is a tariff of 15% on CIF. What will the savings be on 100 million units if sourcing for Country A switches from the home plant to Country B?
Option 1: No savings.
Option 2: $3 million
Option 3: $7 million
Option 4: $20 million
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