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Due to much lower labour costs in Mexico, and the labour-intensive nature of building bicycle wheels, Kona Bicycles is considering assembling its bicycle wheels at
Due to much lower labour costs in Mexico, and the labour-intensive nature of building bicycle wheels, Kona Bicycles is considering assembling its bicycle wheels at a factory in Mexico. It costs SHIPPING COST (USD) to send enough parts to make QUANTITY bicycle wheels (See image below) from Canada to a factory in Mexico and returned to Canada. The assembly cost per bicycle wheel in Canada is CANCOST (USD). The assembly cost per bicycle wheel in Mexico is MEXCOST (USD). To ensure that the Kona's quality standards are being met by the factory in Mexico, once the bicycle wheels arrive back in Canada, they will need to be inspected at INSPECTION COST PER SHIPMENT (USD). What is the cost per individual wheel to assemble the bicycle wheels in Canada? What is the total cost per unit of bicycle wheels assembled in Mexico? Does it make financial sense to get the bicycle wheels assembled in Mexico? Why
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