Maytag Corp. recently purchased rival Amana Appliances and is consolidating its manufacturing and assembly processes. Maytag now wants to reduce costs for the combined businesses by moving some labor-intensive assembly operations to Mexico. The new assembly plant, with an estimated initial investment of $2 million, will receive plastic and metal parts from Maytag’s manufacturing plants and will return subassemblies to Maytag’s US operations for final assembly. The new operation will employ about 230 people and will be similar to Maytag’s Hoover floor-care plant that it has operated for more than 17 years. Amana has operated assembly operations in Amana, Iowa, Florence, South Carolina, and Searcy, Arkansas.

Required

a. Use the decision-making framework in Exhibit 13—1 (and your imagination) to describe Maytag Corp.’s decision making about whether to locate a new assembly plant in Mexico.

b. Prepare a decision tree that describes Maytag Corp.’s assembly plant decision making and includes qualitative and quantitative benefits and costs.