1. Look at the bill of materials costs in Exhibit 16. Why are the percentages for each category so different for the Ohio factory versus the one in Tianjin? The estimated cost for the program at Ohio was significantly higher than that of Tianjin. According to the ex-factory cost with the target price $50 in Exhibit 16, Ohio was 21% higher than while Tianjin was 19% lower than the target price. To compare each cost item at the bill of material cost, we could find that 6 out of 7 of them were relatively more expensive in Ohio, which was mainly influenced by the production yield. First of all, in terms of raw materials, the price of raw material per windshield in Ohio costed 53% above the price in Tianjin. This difference might be related to the variance in purchase price of material and the production yield. On one hand, the purchasing price for raw materials in the U.S. were costlier than in China. On the other hand, the factory required to input extra units of raw material for each defective item, due to the U.S. production workforce, was lacking in the skills required to effectively rework on such blemishes. Second, for labor expense, a labor cost required to produce one unit of windshield in Ohio was 950%, exceeding that of Tianjin. Labor rate and productivity were two elements in labor expense. The labor rate was $3.7 in Tianjin, which was considerably lower than that of $25 per hour in Moraine. At the same time, the productivity in terms of workers per line and output per shift for the Ohio production workforce were also comparably less efficient than the Tianjin team, due to the inexperience of the workers. In addition, Ohio was required to employ more labor to finish the same amount of production when compared to Tianjin. It could be interpreted that the huge