Starting with the costs in Exhibit 16, estimate the potential savings that can be achieved in Tianjin and Moraine

Starting with the costs in Exhibit 16, estimate the potential savings that can be achieved in Tianjin and Moraine

Fuyao law America: Sourcing Decision 615-007 Exhibit 16 Comparison of Total Costs per Windshield: Tianjin versus Moraine Cost Item Tianjin Moraine Target Cost 35$ unless otherwise specified) Raw materials $13.01 $19.90 Labor 23 23.93 Electricity 1.55 1.58 Depreciation 1.55 3.17 Other manufacturing costs 0.88 1.73 SC&A 8.00 Packaging and transportation 15.33 2.13 Total 40.60 60.44 550.00 Other Cost Factors Yield Tianjin 939 Moraine 819 91% SIS First-pass yield Rework and repair No repair Lack of skills -Low productivity Output per shit 750 pairs 650 pins Salary per month CNY5,000/month $25/h 8hs./day, 25 days Shu/day, 22 days Working hours per month Number of workers perline Electricity,cost per kilowatt-lu 57 63 CNY 0.69 30.0600 Inventory (days) Tianjin Moraine 60 % - Inventory held at Tianjin - In transit ocean/truck Svety stock held at Moraine - Safety stock held at Plymouth 50 7 Senarce Compued from company data. Notes today inventory held at Tanjun.comists of 46 days of raw material memory +7 daya production throughput me 7 days 1 finished goods saluty ok. 60-day inventory held at Moraine cost of 46 days of raw material inventory+ 7 days production thoughput time + 7 days finished goods safety stock. Raw materialuwentory is predominantly float glass sheets from supplier factory