hw2.docx - Problem 2.7(a Major increases in oil prices will...

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Problem 2.7 (a) Major increases in oil prices will result in higher transportation cost. So the company should think to change their strategy. They can optimize the transportation route, think of building a regional distribution center; make the sourcing location and manufacturing plant closer to the market as possible (in order to save some transportation cost, however, this plan may have a higher material and manufacture cost, because the sourcing and manufactory is not in the cheapest country); a flexible plant with comprehensive line. (b) Water and air quality legislation would increase the production cost because the company will invest money to meet the waste requirements. Some industry with heavy pollution such as paper factory would shut off in that country. A company can think of outsourcing the manufacturing process to another country, or create a new technique of manufacturing with less pollution.
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  • Spring '14
  • FredPhillips

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