a company opting to boost its sales of branded footwear by offering buyers 500 m

Question

a company opting to boost its sales of branded footwear by offering buyers 500 models/styles to choose from should definitely consider

a. only producing 500 models/styles at a single production location, probably north america where the sales gains from offring 500 will be the greatest, so as to incur the $15 million in production run set up costs only one time.

b. investing in production improvement option B at each production location where 500 models are going to be produced.

c. building production facilities in all four geographic regions and producing 500 models/styles at each location -- the resulting savings in tariff costs should more than cover the resulting $60 million in production run set up costs for 500 models at the four production locations.

d. instituting production improvement option C at each production location where 500 models/styles are going to be produced.

e. closing its production facility in north america and consolidating all future production of 500 models/styles of branded footwear at a single 12-million pair plant in the asia pacific (so as to only incur the payment of $15 million in production setup costs one time and, just as importantly, spread these costs over a greater number of pairs and thus minimize the per pair costs of th e$15 million in production set up costs).

Explanation / Answer

Solution:
Only producing 500 models/styles at a single production location, probably north america where the sales gains from offring 500 will be the greatest, so as to incur the $15 million in production run set up costs only one time.

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