Refer to Problem 8.1. Shipping cost from Cambodia to Denver, Colorado, the final destination, is $1.50 per unit. Shipping cost from China to Denver is $1 per unit, while the shipping cost from Billings to Denver is $.25 per unit. Considering both labor and transportation costs, which is the most favorable production location?
In Problem 8.1, In Cambodia, 6 laborers, each making the equivalent of $3 per day, can produce 40 units per day. In China, 10 laborers, each making the equivalent of $2 per day, can produce 45 units. In Billings, Montana, two laborers, each making $60 per day, can make 100 units. Based on labor costs only, which location would be most economical to produce the item?