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Harrison Equipment ofDenver, Colorado, purchases all of its hydraulic tubing from manufacturers in mainland China. The company has recently completed acorporate-wide initiative in sixsigma/lean manufacturing.

Harrison Equipment ofDenver, Colorado, purchases all of its hydraulic tubing from manufacturers in mainland China. The company has recently completed acorporate-wide initiative in sixsigma/lean manufacturing. Completed oil field hydraulic system costs were reduced 3.5% over aone-year period, from $881,000 to $850,165. The company is now worried that all of the hydraulic tubing that goes into the systems(making up 22% of their totalcosts) will be hit by the potential revaluation of the Chinese yuanif some in Washington get their way. How would a 11.8% revaluation of the yuan against the dollar impact total systemcosts?

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