PRODUCT CIRCULATION ALONG SUPPLY CHAIN: FINDING IN CHINA AND TIAWAN vs . HONG KONG They are aspects worth considering involved making the decision on which variations to origin from China and which styles to resource from Hong Kong. The differences between the producing the items in China and Hk are: * ORDER SIZES: The minimum production amount for a style in Customer 1200 products while in Hong Kong it is 600 models.
Thus Hong Kong factory will produce smaller order quantities successfully, thus permitting the company’s to increase the range of goods it provided and control the inventory risk.
Explanation: This difference in creation abilities is primarily due to the substantial skilled labor coupled with shorter production lines in Hong Kong compared to the low skilled and long development lines in China * LABOUR The employees in Hong Kong worked about 50% faster compared to the personnel in Cina. As a result the parka range in Hong Kong requires only 10 employees to complete all the businesses whereas the parka series in China require approximately 40 personnel. This resulted in the longer production lines.
In spite of the high quality of employees in Hk, the unemployment rate near your vicinity is very low and most in the younger employees prefer workplace jobs. Hence it is difficult to buy labor in Hong Kong. Cause: The differences inside the efficiency could be due to the diversities in the trainings given to the employees in China and tiawan and Hong Kong. The workers in Hong Kong had been more mix functional and were trained to work in broader range of careers compared to the Oriental workers. * TOTAL EXPENSE The overall cost of production is lower in Chinese suppliers as compared to Hk.
Though there is also a definite cost advantage, you will find strict subspecies restrictions by the U. S government upon shipping products from China when compared with Hong Kong. Explanation: The lower development costs in China can be mostly attributed to the low income rates compared to the wage prices paid in Hong Kong. The workers are paid $0. of sixteen per hour in China when compared to $3. 84 per hour paid out in Hong Kong. * TOP QUALITY Another primary difference among sourcing in China and Hong Kong is the quality of the products. The high quality and reliability of the products from China is relatives low when compared to Hong Kong.
Reason: The difference in top quality could generally be caused by the labor skill and efficiency in both the locations. The workers in Hong Kong are capable to increase the production more quickly and thus that they had the short production lines. Longer development lines in China triggered the greater imbalances both in the quality and period required that manufactures the product. Recommendation Based on our analysis we found the order volume for each in the 10 parkas. A detailed order quantity for each and every of the 15 parkas has in appendix 3. Steps for establishing order amount: For Obermeyer we have Cu = $27 and Company = $9 from this all of us calculate CSL for Obermeyer =. 75. This means that there may be 25% possibility for a inventory out suitable for each with the 10 coats. * We all used two standard deviations for the conventional distribution of demand. 5. By using the formula Q=Z. S i9000. D+mean pertaining to 25% stock out the general quantity to be ordered is calculated to become 26412. 5. Since we have to order 15, 000 products the summation of purchase quantity of every one of the 10 jacket is equal to 10, 000. * We assume that the demand for each from the 10 parkas will be in same idea.
Using this all of us calculate for Z, Z=1. 06. * Using the unces value, mean and normal deviation we all calculate the order amount for each from the 10 coats. (See appendix 3) * Also total expected income for 10 parkas is around $2. three or more Million and average left over quantity can be 69 models per parka. APPENDIX 1) Cost research at several stages of production. OBERSPORT| | | | expense if manufactured in hongkong | $60. 08 | | | cost if produced in China | $51. ninety two | | | measured average expense | $56. 00 | | | | | | | Greig Layer fabric | $9. 00 | | | Completing of Cover fabric | $3. 85 | | |
Completed lining fabric| $3. 85 | | | Padding | $4. 80 | | | Zippers | $3. sixty | | | Thread| $0. sixty | | | Logo, Patches and so on | $3. 00 | | | Snaps| $0. 90 | | | Dyeing of snaps | $0. 40 | | | | $30. 00 | | | | | | | Agent fee| | | | Hong Kong | 3. 49| | | China| installment payments on your 98| | | | | | | Labor cost per unit | | | | China| 0. 78| | | Hong Kong| 10| | | | | | | Tranportation cost (weighted average ) | Quantity| charge/unit| total| Ocean | 160000| 1 ) 4| 224000| Air | 40000| 5| 200000| weighted average | 200000| | 424000| measured average/unit| | | $2. 12 | Appendix two Appendix 3