Questions:
1. What is the total cost of making a bag in Seattle? What is the total cost of making a bag in Malaysia, including the transportation cost of shipping the bag
from Malaysia to the United States?
2. Suppose Timberland does move production of wholesale bags to Malaysia. Let’s say it can place orders with its Malaysian supplier every four weeks; that
is, one period equals four weeks. Its lead time is two periods; that is, L = The average demand for one type of wholesale bag is 200 bags per period (i.e., they
sell, on average, 200 bags every four weeks), with a standard deviation of 100 bags. The holding cost for each bag each period is $1.00, and it would operate
with a 2.5 safety factor. How much inventory on average, would it have on order and on hand? What would be the inventory holding cost per bag?
3. Should it move the production of custom bags to Malaysia? Should it move the production of wholesale bags to Malaysia? Make an answer to these two
questions, using both quantitative and qualitative reasoning- as appropriate.
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