FINAL REPORT

Project Title:
Simulation Model to Analyze the Impact of Outsourcing
on the Performance of the Furniture Supply Chain

Investigators:
Burak Eksioglu (PI), Sandra Eksioglu,
Mingzhou Jin, Jilei Zhang

Project Period:
1/1/2007 – 1/31/2008

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1. Introduction
With more outsourcing to Asia, the supply chain for US furniture companies are
becoming longer. However, US customers expect a high variety for their furniture as well
as short delivery times. Due to these factors, furniture companies that want to succeed in
an industry witnessing dramatic changes need to have efficient logistics management to
have a competitive advantage. To make their logistics network more efficient, companies
need to choose the right supply chain model, promote cooperation with their partners in
the supply chain, and adopt new technologies for better decision making and
management.
1.1.

The Upholstered Furniture Industry in the United State

Since late 1990’s, the furniture industry in the US quickly shifted much of its production
to Asia. Major furniture manufacturers either shut down their plants or reduced their
production in the US. For example, La-Z-Boy Inc., the second-largest furniture
manufacturer in the US with $2.1 billion in annual sales, has shut down much of its US
production and moved to China (Chavez, 2007). Major US furniture companies now
focus on brand management and logistics management. Furniture retailers are seeking
direct outsourcing overseas. Furniture factories in Asia are also seeking direct US
business. In other words, the whole furniture supply chain, in a global scope, is
experiencing a dramatic change. To survive and develop in this dynamic environment, all
players need to define, develop, and maintain their competitiveness via tuning their
supply chain.
In 2006, US consumers spent $83,920 million on residential furniture and bedding, which
represented a 6.2% increase from 2005. Table 1 summarizes the shipments of wood and
upholstered furniture in the US.

Wood: Domestic
Wood: Imports
Upholstered: Domestic
Upholstered: Imports
Upholstered: Imports from China

2005 (Million)
$13,141
$10,491
$11,700
$2,304
$1,100

2006 (Million)
$13,484
$10,872
$12,260
$2,606
$1,600

% Change
2.6%
3.6%
4.8%
13.1%
45.5%

Table 1. Shipments of wood and upholstered furniture in the US (Epperson, 2007)
US upholstered furniture imports from China has grown on average 56% a year over the
last decade. It is expected that the growth of upholstery imports from China will continue,
especially for fabric upholstered furniture. The biggest upholstered furniture
manufacturing cluster in the US, which has about 200 companies and 25,000 employees,
is located in Northeast Mississippi. Most of them receive supplies from Asia, mainly
China and Vietnam. A typical shipment from Asia to a furniture company located in
Northeast Mississippi is illustrated in Figure 1. Three transportation modes are involved
in the shipment: ocean, railway, and highway. After arriving at Long Beach by ocean,
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containers with furniture material, parts, or assemblies are shipped to Memphis by rail
and then go to the companies by trucks.

Memphis
Tupelo

by railways
by trucks

Figure 1. A Sample Shipment from Overseas to a Furniture Company
Located in Northeast Mississippi.
1.2.

Logistics: A Key Issue in the Competition

As shown in Table 1 above, imports have a large share in the furniture market in the US
and this share is growing. There are three major reasons why US furniture companies
have been losing their market to imports in the past 15 years.
1. The globalization forces have exposed US furniture companies to global
competition (Schuler and Beuhlmann, 2003).
2. Containerized shipping technology significantly has reduced the global shipping
costs (Schuler and Beuhlmann, 2003).
3. Production of furniture is labor intensive, and the labor cost in the US is much
higher compared to many developing countries.
Based on Table 1, the percentage of import upholstered furniture is smaller compared to
the percentage of case goods (wood furniture). The underlying reasons are primarily the
different requirements on delivery time due to the degree of customization and the
different logistics costs. Customers are typically not given many options with wooden
furniture. US furniture companies can order a large batch of standard wooden furniture
without facing a big waste in their inventory. The orders from customers are mainly
satisfied from on-hand inventory so that the delivery times are short. In contrast,
customers often can choose different colors or fabrics on their upholstered furniture. The
variety of colors and fabrics is very high. Holding a large inventory for all varieties is not
only cost prohibitive but also risky because it is very difficult to forecast customers’
demand. At the same time, customers are not willing to wait months to receive their
orders. They are typically willing to wait several days or weeks, which can not be met in
most cases by a direct shipment from Asia now. Therefore, US furniture companies have
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such as Disney and Marriott. US upholstered furniture companies just recently realized that competitiveness can be improved by providing customized products for different markets.3. 4 in sales to No. globalization and excellent supply chain management (i. in their 40s and 50s now. other furniture companies closed 280 plants (about 33% of the total production capacity) in the US. including having unique furniture. In the computer industry. textiles etc. imports of upholstered furniture has also started to increase in recent years because of significant reductions in transportation lead times due to new adopted business models and technologies adopted in global furniture logistics. Another example of a Mississippi company that has been successful in the furniture business assembles furniture for big resorts and hotel chains. They have been profitable and have been able to grow because of the following reasons: (a) they offer customized designs to 4 . Baby boomers. It requires an efficient logistics network by adopting right business models and new technologies. Cisco. logistics management). were nearly tripled in 2006.to finalize the upholstered furniture production. Ashley Furniture Inc. Ashley imported three containers of fabric. The short delivery time indicates they have a very good supply chain management. Canada Tire and others as one of “supply chain icons” by Gilmore (2006) because it manages a long global supply chain like a just-in-time one. Though the overall US furniture industry is in trouble. This is why case goods manufacturing in the US has been hit hardest by Chinese competition in the last decade. Mid-priced upholstery maker Southern Furniture has recently launched a “customer-order program” to have a major shift from “factory-designed” to “have-it-your-way” fabrics (Evans. it can be learned that logistics management is a key issue in the competition among upholstered furniture companies. but 3. Dell succeeded because they allowed their customers to specify their computers and provided a fast delivery. imports from China. upholstered furniture such as bulky sofas and stuffed chairs cannot be shipped as cheaply as case goods. Furthermore. 1 among all US furniture companies over the last six years. Ashley furniture was among the first US furniture manufacturers to begin importing. Their success was driven by two factors. The company expects a jump in their sales in excess of 25% by providing more specialization and differentiation to their customers. However. Ashley is listed along with IBM. has grown from No. Ikea is growing because it is providing designed furniture to its customer. During the same period. Ashley recently hired about 10. From the success story of Ashley.487 containers in 2006. With this volume of imports. which means they tripled their employment compared to 1998. have more purchasing powers than the rest of the society in the US and always pursue to be unique. In fact. 1. 2007). in 2002. which provides 80% of Ashley imports. Ashley can still take about a week to deliver to customers compared to a three-week lead time for most other furniture companies.e. Compared to 2002. This fact has been well proven by Wal-Mart’s success in the retailing industry and Dell’s success in the computer industry. Having a short lead time while keeping cost low is critical to be successful. The company provides customized designs and assembles the furniture that goes in these 4 and 5 star hotels. Logistics Management Challenges in the Upholstered Furniture Industry The whole economy is moving in the direction of customized products.000 employees. The material used in their furniture comes mainly from China.

Many big furniture companies. Ashley’s plant in Kunshang. The existence of agents in the first and fourth models is because of the following two reasons: a small volume cannot justify the overhead costs of direct contact with Chinese manufacturers and a small demand can cause large logistics cost. and 3) it is difficult to predict demand four months in advance. Supply Chain Models for Furniture Imports from China to the US In the manufacturer outsourcing model. (c) they use outsourcing to their advantage as they purchase all their materials from China. assembly. (2003) Chinese Manufacturer US Manufacturer Plant in China Chinese Manufacturer Agent Agent US Manufacturer US Manufacturer Wholesaler/ Retailer Wholesaler/ Retailer Manufacturer Outsourcing Model Chinese Manufacturer Direct Investment Model Wholesaler/ Retailer Wholesaler/ Retailer Direct Sales Model Agent Outsourcing Model Figure 2. Most upholstery manufacturers in Mississippi follow this model because customers want to enjoy a large variety without having to wait too much. US manufacturers outsource parts. Big retail chains such as Wal-Mart and Pier 1. The plant is still expanding. However. such as Ashley or La-Z-Boy. In our survey of the furniture industry in Mississippi. the companies interviewed mentioned three problems: 1) the order delivery could be even later than promised which results in additional in-transit inventory. several furniture companies said that they have to place an order four months in advance if they want a container load of raw materials directly from China. China employs about 5. follow the direct sales model and have established the direct channels to obtain furniture products from Chinese manufacturers. Four supply chain models for furniture imports from China to the US. (b) lead time is not of a big concern as the customers make orders well in advance.a profitable market. have built their own production capacity in China and follow the direct investment model. 2) because they are small companies they don not have special equipment and expertise to unload containers.000 workers and covers an area of about 1. were discussed by Bryson et al. or final products from China through agents but still keep some production capacity domestically. 5 . and unloading a container is dangerous and costly for them. Therefore. they usually go through an agent in Georgia which has higher prices. Though the price is low.2 million square feet. illustrated in Figure 2. many small and local furniture stores go through agents to receive furniture from China following the agent outsourcing model.

having a container load supply means huge inventories and therefore a very low inventory turnout rate. high inventory usually mean inefficiency. should be used for manufacturing and logistics planning to have better demand forecasting. During its rapid expansion. including manufacturers. which account for as much as 20 to 25 percent of sales (Terry 2007). West Coast orders can typically be filled in less than 2 weeks. competitive strategy. agents and 3PLs have enough volume to efficiently deal with containers. One big issue in furniture logistics is dealing with returns. wholesalers. agents. different parties. They mix loads to fill containers and ship containers to the warehouse in the US. a key success factor for a supply chain is the cooperation among parties along the supply chain. Many small US furniture companies can then enjoy container-level prices for their orders. The quality of furniture from Asia has significantly improved in the recent years (Bryson et al. The success of Toyota was driven by their Just-inTime system and their continuous effort to reduce the inventory. Shipping furniture from overseas to the US in full containers can reduce logistic costs by up to 20% (Terry. Moving furniture through the supply chain more efficiently with better packaging and minimum handling are the keys to reduce the costly reverse flow of goods (Terry 2007). 6 . The agent operates a warehouse to hold inventory to provide a short lead time to its customers. However. which could be a third party logistics provider (3PL). increasing the product quality and reducing damage during shipment. consolidates the demands from small customers so that they can fill containers easily. including information sharing and planning coordination. the furniture manufacturing and logistics management have been slow in adopting new technologies. It is well known in the inventory theory that consolidated demands enjoy smaller variability. such as SAP. With this operation. 2007). logistics companies. Though high technologies have been widely used in other industries to improve productivity. Globe Express Services. There are two ways to reduce returns. a 3PL carrier specializing in US-Asian trade. 2003). Enterprise resource planning softwares. inventory management. With the consolidation. operates warehouses in Asia and the US. and improve inventory turnout rates. Better information sharing can help to reduce the lead time and help each party to make better decisions. Bar codes should be used for tracking in order to get accurate information on the amount and location of parts and products. reduce the variability of demand over time. Based on the experience from other industries such as the automotive and computer industries. The supply chain model a furniture company should adopt depends on the size. Different Chinese suppliers can deliver to their Asian warehouses. and customer delivery requirements of the company. Along the supply chain. need to use electronic data exchange technologies to share information in a more accurate and timely way. Dell enjoyed higher inventory turnout rates than HP and Gateway.The companies typically call the agent two weeks in advance with about three truck loads of shipment. and logistics network design and operations. No matter which business model is used. Furniture companies have to invest more on new technologies in order to succeed or even survive in such an industry facing a dramatic change. An international furniture trade agent. As shown by the example of the small furniture manufacturers in Mississippi. and retailers. only the largest furniture retailers and manufacturers can handle orders at the container volume.

many articles state that global supply chains are more difficult to manage compared to domestic supply chains (Wood et al. international outsourcing was considerably expanded through the last decades of the twentieth century (Taylor.S. or outsourcing to foreign manufacturers. components and materials (Chopra and Meindl. 2003). and reduced logistics costs (Ferdows. thus favoring Chinese goods in the U. overseas manufacturing. low cost direct labor. capital subsidies. especially Asian countries. To reduce manufacturing labor costs companies are now moving to places like China to take advantage of the low labor costs. An increasing share of furniture imports from other countries.S. The loss of business and job opportunities is due to the influx of foreign-made products that are priced well below products made domestically (Nwagbara et al. but forces complicated decisions in inventory policies because of tradeoffs between inventory cost and increased lead-time. computer. 2003). Dornier et al. 1997). and apparel industries.. Census Bureau 2008). 2004). whether company-owned or external suppliers. This growth in globalization has motivated a lot of academic interest in global supply chain design and outsourcing management. In the automobile. delivery time. fills the gap between domestic consumption and production. However. and changes in the regulatory environment have 7 . the amount of capacity at each facility. wages (ILO 2006). (Raymond 2002). and kept increasing to $123 billion in 2007 (U. To stay competitive. However. 1997. 2003). et al. North Carolina. market. 2002. Substantial geographical distances in global supply chains not only results in higher transportation costs. 2002. unique risks including variability and uncertainty in currency exchange rates. and market uncertainty in the future (Nembhard. Literature Review It is reported that the growth of furniture and home furnishing retailer sales value in the United States exceeded $100 billion in 2003. The value of outsourcing depends on transportation costs.S. and then to Indiana. domestically produced furniture among these retailer sales has declined by more than $5 billion between 2000 and 2003. Foreign factories can benefit from tariff and trade concessions. It is reported that the wages in China are about 16 times lower compared to U. the American wood furniture manufacturers use some of the following strategies: semi-customized products. Anonymous 2004a). In furniture manufacturing. the Chinese to U. and supplier selection for sub-assemblies. the assignment of each market region to one or more locations. A supply chain design problem comprises the decisions regarding the number of location of production facilities. 1998). Global supply chain design includes an additional selection of international manufacturing sources. MacCarthy and Atthirawong. Furthermore. Aeppel 2003. This was the main reason why furniture manufacturers moved from New England to Michigan. fast order fulfillment. In addition.700 workers in the wood furniture industry in the United States since 2000 (Buehlmann et al. typically 40% of the total manufacturing cost is the labor cost (Whelan and Maklari 2002).S. The increased competition of foreign furniture manufacturers resulted in a loss of about 34. and Mississippi (Raymond 2004).2. currency exchange rate is fixed at an artificially low level. economic and political instability.

The model is used to perform “what-if” analyses. Figure 3 gives an overview of the model components and how they relate to one another. is conducted for examining ongoing and emerging issues in globalization production (Meixell and Gargeya 2005). 3. including both internal manufacturing and external supplier locations. Figure 4 shows a snapshot of the model. A Monte Carlo simulation model was conducted to show the long-term value of outsourcing under dynamic market conditions. which is demonstrated by an example from apparel manufacturing industry. with 113 US apparel manufacturers responding. it was concluded that global versus domestic sourcing apparel firms are not significantly different in terms of market performances. A literature review for the model-based supply chain design problem. response time. 8 . For example. Jin (2005) conducted a survey. but has some possibilities to be favorable. and retailers compete more effectively in the national and international marketplace. However. the decision makers are able to adjust parameters such as defect rate. Grossman and Helpman (2002) developed a model to exhibit the tradeoff between in-house production and outsourcing. outsourced production has to overcome search frictions and contractual imperfections. inventory turn rate. The performance measures that are captured by the model are order fill rate. The simulation model allows managers of furniture companies to estimate the impact of various decisions related to outsourcing on the performance of the supply chain. Nembhard et al. On the other hand. In this section we will provide a description of the simulation model that is developed to illustrate the supply chain structure of a typical furniture manufacturer in Mississippi. lead time distribution. In section 2 we gave a review of the general outsourcing literature along with examples from the furniture industry. component suppliers. (2003) concluded that outsourcing is not always better than in-house production. production. Simulation Model In section 1 we provided a detailed background on the current state of the furniture industry. 1998). Decision makers can use this valuation methodology to choose the appropriate outsourcing strategy. Finding a firm's optimal share of outsourcing is an emerging topic of interest. outsourcing topics are analyzed by using contract theoretical approach complemented with strategic organizational production mode research (Grossman and Hart 1986). The results of “what-if” analysis (given in section 4) can help furniture manufacturers. lost sales.significant impact on companies' market performance (Dornier et al.. and costs (inventory holding. In-house production represents a more standard form of production with higher input costs for components. Product outsourcing is recognized as a way to gain flexibility for competitive advantage (Nembhard et al. 2003). and total cost. companies with small sales volumes with a focus on basic items mostly source domestically. transportation) to estimate their impact on supply chain performance measures. A financial model to assess the option value of product outsourcing is developed in this article. In some articles. Based on this empirical study. to show that companies producing large sales volumes of fashion-oriented apparels tend to significantly source globally. demand distribution.

the local supplier offers a higher price but guarantees a short lead-time with no damage. Table 2 shows the current model settings on unit price. capacity 9 . 3. Asian supplier offers a lower price but longer lead-times and higher damage rates. On the other hand.  Transportation time on the sea (from the Asian supplier to Long Beach): 10 weeks.  Transportation time to Memphis via Railroad: 13 days  Waiting time at Memphis load-unload station: T(0. The inventory at the local supplier is replenished at the beginning of each month to a certain level Q (capacity of local supplier). Suppliers in our simulation model There are two types of suppliers: An Asian supplier and a local supplier.24) 10% Local supplier $7 1 0 Table 2. In the current version of the simulation model. If the local supplier goes out of stock before the next replenishment. MS: 1 day.  Transportation time to the manufacturer at Tupelo. CA: T(0. retailers' orders waiting more than one week are considered as lost sales. Lead-time of Local supplier is assumed to be constant at 1 week as long as there is inventory at the local supplier. 8) weeks.1. It is assumed that the local supplier is using a (Q. lead-time. 1.Retailer at Portland Asian Supplier Retailer at Chicago Manufacturer Local Supplier Retailer at Houston Retailer at New York City Retailer at Jacksonville Figure 3. Unit price Lead-time (weeks) Damage rate Asian supplier $5 T(12.R) inventory policy. Input information for the two types of suppliers is estimated based on the feedback collected from furniture companies that we visited. Simulation Model Structure 3. Model settings on parameters of suppliers (T denotes a triangular distribution) Lead-time of Asian supplier is divided into five components in the current simulation model. When the inventory level drops to R (the reorder point) the local supplier requests a new shipment of size Q. and damage rates of the Asian and Local suppliers. 4) weeks. The local supplier continuously keeps track of its inventory.16.  Waiting time at the import point of Long Beach.

In these scenarios. The results of these different scenarios are presented in section 4.g. there is an integrated furniture manufacturer located in Tupelo. The manufacturer in our simulation model In the current model. A Snapshot of the Simulation Model 3. 10 . we run different scenarios under which the manufacturer would order part of the required raw material from the Asian supplier and buy the rest from local supplier. However. Based on our survey of several Mississippi furniture companies. we also analyzed other scenarios in which the local supplier has a limited capacity. plywood). when the manufacturer is out of stock (due to late arrivals or damaged items from the Asian supplier) it is assumed that the manufacturer places weekly orders from the local supplier. In the model. the manufacturer is assumed to produce only one type of finished product which requires only one type of raw material (e. we use the same setting while we set the ordering amount equal to the total demand received in the previous four-week period.2. the manufacturer would prefer to order everything from the Asian supplier since the Asian supplier offers a much cheaper unit price. they usually keep one month’s worth of inventories and order a certain amount of raw materials from Asian supplier every month. To simplify the model. To reduce costs of buying raw materials. All these settings are flexible such that a specific furniture manufacturer can use their input numbers and run the model to analyze their supply chain performance. To study the impact of outsourcing on the manufacturer's purchasing cost. MS.of local supplier is set to a large number to make sure that there are no lost sales. Figure 4.

which is set to 11 . Since there is no historical demand data for these pre-scheduled orders. we have five aggregated retailers distributed all over the US. then the manufacturer places an order from the local supplier and receives it one week later. This current on-hand inventory may be because of an order that the manufacturer requested from the Asian supplier. The ordering amount is equal to the total demand of the previous four weeks except for the first order.4. So. The moving time along the path-network in the simulation is not the true travel time but the total lead-time from receiving the order to delivery. 3. It is assumed that the manufacturer schedules each retailer's delivery on a fixed day every week as shown in Table 3.3. When there are not enough inventories to fulfill demands from retailers. it is very possible that the manufacturer goes out of stock time to time. the manufacturer places an order from the Asian supplier every four weeks. Retailers in our simulation model In the current simulation model.Since the total lead-time for an order from the Asian supplier varies significantly between 12 weeks to 24 weeks. Color Coding for Transportation Entities The arrival process in our simulation model Once the simulation starts. The manufacturer promises a 2-week lead-time if there are enough inventories to fill the order. Table 4 shows the color coding for transportation entities in the simulation model. four pre-scheduled order arrivals are created in the simulation because the average lead-time is set to be 4 months (16 weeks). all the amounts are set to an average four-week demand of 200 units. Once the simulation starts. the manufacturer orders the backlog amount from the local supplier and would be able to ship the delayed order 1 week later. the manufacturer has one month’s worth of inventory on hand. Delivery of raw wood material to the manufacturer Table 4. If there is not enough inventory. Truck Entity Color Code Description Green On-time delivery of finished product to a retailer Red Delayed delivery of finished product a retailer White 3. Delivery Schedule Monday Tuesday Wednesday Thursday Friday All orders from a retailer during one week are aggregated on the delivery day. 2). Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer Retailer-Portland Retailer-New York city Retailer-Chicago Retailer-Jacksonville Retailer-Houston Table 3. Weekly demands from each retailer follow the same normal distribution N(10.

However. and the time the retailers are willing to wait for an order. The parameters that we change in our simulation are the unit price of the materials purchased from the Asian supplier. and the unit cost of raw material from Asian supplier at the end of the simulation.  Purchasing costs: total cost the manufacturer spends to buy all raw materials. 4. the percentage of demand supplied from the Asian supplier.200 units (i.  Inventory holding cost: calculated as a product of the average inventory level.e. The capacity of the local supplier in the base scenario is 120 but this value varies between 40 and 200 in increments of 40. as can be seen from Table 2 above. since the retailers are waiting for items to be shipped there is no “lost sales.5. the capacity of the local supplier.  Inventory: inventory level of raw materials at the manufacturer. as the capacity of the local supplier decreases the value of lost sales increases. It can also be seen from Table 14 12 .  Backlog penalty cost: calculated as a product of the average backlog level.  Fill rate: percentage of retailer orders that are filled on time. The first four measurements are tracked dynamically during the simulation. That is why the numbers in Table 7 are all zeros. and the unit cost of raw material from Asian supplier at the end of the simulation. In our base scenario. we change this value from $2 to $7 in increments of $1.  Backlog: backlog level of retailers’ orders at the manufacturer. in Tables 12-18 the assumption is that the retailers are willing to wit a maximum of one week for items. In other words. The results in Tables 5-12 correspond to the scenarios in which the assumption is that the retailers are willing to wait as long as it takes for the manufacturer to ship the items. these initial starting conditions will not significantly affect the final statistics. The percentage of demand supplied from the Asian supplier varies from 0% to 100% in increments of 10%. the unit price of the Asian supplier is $5. a penalty rate of 30%. The performance measure in our simulation model Six performance measurements are collected in our current simulation model. an interest rate of 20%. same as the pre-scheduled arrivals). The first column in Tables 5-18 (given in the Appendix) show the unit price used in that particular scenario. the numbers in Table 14 show the value of lost sales. 3. If the order is not fulfilled within a week then the retailers go to a different manufacturer. Since we set one-year warm-up period in the simulation. Experimental Results As discussed in the previous sections. Therefore. The first row in Tables 5-18 show the percentage used for each scenario. The second column in Tables 5-18 show the capacity of the local supplier used in each scenario. we used our model to simulate the supply chain of a furniture manufacturer under different scenarios. As can be seen from Table 14.” However. The last two are collected at the end of the simulation.

However.that as the percentage of demand requested from overseas supplier decreases the value of lost sales increases. if the Asian supplier offers a unit price below $6 then it seems like all of the demand should be outsourced. Beyond 40% the profit of the manufacturer slightly decreases. this is not necessarily the case when the capacity of the local supplier is lower. In other words. For example in Figure 5 the assumption is that the local supplier has a high capacity. In this case. 13 . the demand can easily be met from the local supplier possible at a higher cost. Change in Profit vs. and 7 show how the profit of the manufacturer changes as the amount of demand outsourced changes. we can see that if the unit price of the Asian supplier is $7 then it makes sense to outsource up to 40% of the demand. more of the demand is filled from inventory but if the demand cannot be met within a week then it is lost. Figure 7 provides a graph of the impact of outsourcing on profit when the capacity at the local supplier is low. as can be seen from Figure 6. 6. If the unit price of the Asian supplier is $2 then one can potentially outsource all of the demand. Percent Outsourced (high local capacity) 250% Change in profit (%) 200% $2 $3 150% $4 $5 100% $6 $7 50% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Dem and outsourced (%) Figure 5. Figure 5. This can be explained by the fact that the results in Table 18 correspond to the scenarios in which the retailers are willing to wait at most one week to receive their orders. One can see that the fill rate values are relatively higher in Table 18 compared to Table 11. the increase in profit beyond the 40% mark is not as significant as the gain in profit up to the 40% mark. From Figure 5 we can conclude that $6 is the breakeven point. Results from Tables 11 and 18 also provide interesting insights about the demand fill rates for various scenarios. Change in profit as outsourcing percentage changes when local capacity is high From Figure 6. However. Therefore. Therefore. it can be seen that the best decision for the furniture manufacturer would be to outsource about 80% of its demand and rely on the local supplier to satisfy the remaining 20% of the total demand.

local capacity) 250% Change in profit (%) 200% $2 $3 150% $4 $5 100% $6 $7 50% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Dem and outsourced (%) Figure 6. Percent Outsourced (low local capacity) 250% Change in profit (%) 200% $2 150% $3 $4 $5 $6 100% $7 50% 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Dem and outsourced (%) Figure 7. Change in profit as outsourcing percentage changes when local capacity is medium Change in Profit vs. Percent Outsourced (avg. Change in profit as outsourcing percentage changes when local capacity is low 14 .Change in Profit vs.

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58 $14.53 $12.80 $15.44 40 $10.37 $12.55 $9.288.360.529.06 $15.339.790.509.844.46 $18.976.771.83 $16.12 $16.656.86 $11.89 $10.548.50 $16.97 $13.72 $15.056.71 $15.501.942.87 0% $18.06 $17.78 $8.169.221.49 $10.339.74 $17.727.859.154.169.919.77 $18.36 $3.37 $10.983.38 $14.77 $18.811.12 $17.20 $15.31 $10.712.414.30 $19.190.36 $3.36 40 $20.750.631.49 $7.41 $8.73 $9.120.88 $4.045.978.505.90 40 $15.21 $10.09 $4.386.42 $13.601.88 $11.02 $15.115.084.09 $8.946.20 $12.44 $10.58 160 $12.654.86 $11.895.56 $14.39 $9.376.315.223.63 $7 200 $20.38 $11.300.08 $7.467.17 $12.05 $18.169.86 $7.475.123.38 $14.65 $16.93 $14.555.059.83 $19.78 $19.61 $15.75 10% $17.47 $16.290.34 $17.093.86 20% $15.01 $9.69 $8.694.37 $15.59 $12.38 $14.521.169.154.11 160 $7.673.244.47 $8.49 $17.857.71 $3 200 $9.530.696.829.36 $3.718.12 $5.18 $11.257.611.98 $13.384.20 80 $7.30 $15.463.Appendix: Tables of Results Table 5: ANNUAL TRANSPORTATION AND PURCHASING COSTS Overseas Local Percent Demand Supplied from Overseas unit price Capacity 100% 90% 80% 70% 60% 50% 40% 30% $2 200 $7.549.69 $18.56 $6.640.065.190.64 $13.741.640.330.44 $15.932.775.13 $17.446.77 $13.097.90 80 $15.688.309.640.997.36 $3.889.98 $11.658.255.51 $10.985.63 $19.370.221.695.992.38 $14.789.952.07 $13.665.616.640.734.876.739.151.314.567.448.492.356.589.917.18 $5.733.94 $4 200 $12.805.413.840.373.826.16 $17.79 $17.42 $15.94 $10.596.958.699.514.19 $19.72 $12.06 $12.465.41 $17.678.136.93 $12.692.937.86 $7.38 $14.959.847.54 $11.48 $17.515.127.964.01 $14.459.221.42 $16.96 $14.35 160 $9.154.37 $6.663.809.76 $16.18 $14.19 $11.94 $17.345.789.114.464.289.604.72 $9.238.86 $11.92 $13.79 $15.487.932.699.32 $13.02 $18.28 $17.245.13 80 $17.488.67 $16.02 $15.795.50 $6.83 $15.29 $17.30 $15.732.53 $5.683.01 $7.829.36 $15.307.03 $16.58 $17.239.288.23 $20.36 $3.86 $14.26 $13.407.441.89 $15.27 160 $20.62 $12.50 $17.234.313.640.53 $16.32 $14.52 $15.878.059.229.681.634.18 $19.890.86 $11.744.169.818.54 $14.611.96 $9.161.787.612.461.109.23 120 $17.94 $18.61 $10.93 $9.216.11 $8.07 $16.00 $18.14 $7.55 $6.493.62 $12.273.91 $5.803.29 $4.56 $14.858.00 $18.86 $11.639.03 $19.137.503.86 $7.28 $13.00 $18.87 $7.93 $18.89 $12.82 $17.91 $8.255.587.740.897.059.84 $16.006.46 $16.00 $15.21 $10.702.73 $5.318.740.897.216.81 160 $14.74 $16.64 $16.471.964.51 $12.21 $8.786.26 $13.53 120 $9.856.650.149.97 $11.48 $19.960.426.72 $17.708.551.45 $10.10 $17.89 $12.738.640.189.552.04 160 $17.080.86 $7.513.47 $17.70 $16.10 $13.28 $9.087.699.97 $14.681.00 $18.83 $17.11 $8.73 $20.415.596.38 $14.044.169.698.059.19 $9.19 $7.055.018.610.269.021.28 $8.607.42 $11.271.86 $7.90 $14.63 $19.15 $13.84 $13.30 120 $7.150.49 $12.96 $18.250.656.436.393.46 120 $20.44 80 $9.27 $16.03 $12.224.165.36 $17.75 $19.699.71 $9.303.19 $15.60 $10.40 $6 200 $17.24 $11.005.86 $5.20 40 $7.22 $18.917.29 $15.13 $18.63 $17.881.54 $14.32 $10.86 $12.307.823.94 $15.756.627.912.23 $17.40 $11.66 $15.63 $19.059.92 $11.16 $14.011.64 $17.565.800.30 $16.11 $8.39 $19.31 $9.99 120 $15.12 $17.421.21 $10.67 40 $12.40 $11.63 $19.059.857.79 $12.148.92 $18.21 $12.60 $17.707.598.890.481.47 $4.23 $6.481.73 $16.187.823.70 $11.51 $13.622.026.42 $15.303.33 $13.394.793.40 $13.633.90 $16.44 $8.982.777.43 $9.86 $7.161.749.065.704.799.968.36 80 $20.470.54 $16.48 $19.699.581.93 $19.31 $12.066.242.67 $13.91 $13.333.33 $8.389.32 $8.339.286.953.601.69 $12.13 40 $17.41 $11.51 $12.343.705.442.46 $16.297.48 $15.00 18 .506.010.826.339.332.531.673.21 $14.11 $13.987.46 $15.00 $14.53 $17.71 $8.71 $4.255.806.52 $18.927.157.24 $15.644.52 $8.528.65 $10.856.936.55 $6.957.45 $14.169.339.09 $15.508.887.156.78 $14.17 $5 200 $14.79 $13.11 $11.90 $17.28 $19.258.86 $11.699.842.038.57 $17.44 $10.165.32 $12.00 $18.924.36 $3.536.355.339.69 $14.85 $19.91 $11.173.53 $17.708.507.76 120 $12.581.981.79 $14.339.740.07 $12.964.731.22 $5.82 $16.17 $18.28 $7.67 80 $12.66 $14.762.689.62 $12.36 $9.43 $9.767.116.589.81 $10.019.094.918.

80 $1.998.14 $31.16 $6.67 120 $212.93 $1.96 $66.72 $3.60 $1.901.298.97 $592.46 $119.16 $128.96 $2.533.99 $65.23 $128.85 $2.62 $967.034.87 $1.072.86 $257.00 $1.501.56 $2.96 $1.21 $4 200 $122.74 $2.66 $1.91 $237.15 $52.08 $17.12 $31.29 $146.34 $1.57 $696.77 $147.49 $2.596.03 $137.87 $2.62 $2.13 $338.871.51 $98.99 $1.94 $1.71 $4.30 $18.748.78 $85.56 $111.Table 6: ANNUAL INVENTORY HOLDING AND BACKLOG COSTS Overseas Local Percent Demand Supplied from Overseas unit price Capacity 100% 90% 80% 70% 60% 50% 40% 30% $2 200 $61.79 $78.92 $123.49 $517.23 $41.740.471.46 $21.056.67 $5 200 $153.235.588.19 $1.91 $110.12 160 $122.89 $32.147.62 120 $152.47 $3.22 $2.51 $41.80 $185.385.325.14 120 $182.18 $53.56 $169.46 $27.11 $23.460.68 $64.04 $6.71 160 $214.26 $47.37 $55.15 $85.89 $124.392.85 $37.04 $145.33 $861.32 $49.70 $74.09 $3.12 $3.134.35 $74.69 $508.27 0% $32.23 $13.033.15 $78.46 $51.26 $3.02 80 $116.15 $29.77 $149.16 $2.00 $914.817.84 $192.044.934.62 $77.25 $154.85 $254.14 $98.64 $144.575.71 $515.572.650.394.86 $150.901.19 $35.633.08 $169.497.60 $516.99 $689.27 $63.76 $96.31 $98.59 $26.30 $1.49 $862.21 $2.94 $52.75 $26.747.751.63 $110.038.69 $31.86 $132.126.38 120 $60.28 $55.84 $79.976.92 $79.92 $3.44 $164.70 $148.15 $89.866.21 $38.57 $772.49 $1.991.287.124.67 $609.66 $2.55 $1.49 $4.38 $23.230.09 $2.34 $2.59 $7 200 $214.957.38 10% $11.44 $194.23 $3.75 $111.10 120 $121.04 $128.97 $82.53 80 $146.63 19 .62 $109.47 40 $50.61 $193.22 $1.41 $423.28 $386.194.733.67 $47.072.84 $3 200 $91.76 $79.88 $48.517.38 $5.67 $1.17 $138.69 $107.65 $4.965.721.98 $129.295.75 $3.74 $1.41 $95.530.193.206.60 $4.23 $7.316.01 80 $58.08 $64.26 $79.47 $107.59 160 $91.53 $32.33 $5.557.60 $8.19 $2.61 $73.47 $66.44 $62.789.90 $83.30 $41.28 $5.64 $1.206.40 $4.36 $2.11 $1.61 $1.95 $165.06 $92.40 $4.05 $6.947.61 $64.600.98 $111.41 $38.06 $1.74 $2.91 $2.584.32 $72.63 $4.219.442.14 $297.86 $3.06 160 $60.48 $5.686.50 $1.214.42 $77.639.29 $138.76 $1.417.35 $94.00 $901.63 $39.13 $48.829.25 $1.54 80 $204.92 $42.74 $121.18 40 $126.65 160 $153.32 $5.98 $1.10 $4.70 $19.358.850.86 $3.39 $42.70 $47.961.28 $786.641.73 $344.499.00 $344.22 $82.112.67 $3.97 $114.94 40 $100.248.373.697.325.450.92 $103.252.23 $62.78 $104.82 $858.44 $1.27 $62.46 $689.04 $4.92 $37.893.38 $63.18 160 $183.30 $1.27 $2.60 $416.54 $111.41 $429.56 $28.47 $2.07 $7.37 $356.27 $55.89 $3.88 $39.438.11 $57.92 $55.88 $73.24 $1.81 $54.755.54 $4.13 $92.32 $3.853.71 40 $75.54 $125.08 $42.94 $51.20 $120.83 $103.83 $607.21 $129.74 $104.089.02 $83.64 $2.57 $49.49 $6 200 $183.418.65 $519.669.25 $910.59 $83.80 $166.68 $178.91 $1.83 $2.18 $3.06 $877.04 80 $175.543.10 $86.834.62 $1.13 $1.524.38 $66.83 $74.65 40 $176.14 $122.179.058.14 $644.345.83 $158.805.707.46 $180.78 $6.19 $2.089.65 $81.016.69 holding cost rate = 20% 20% $16.800.52 $1.78 $1.46 $1.40 $171.52 $3.08 $1.690.11 $5.11 $643.20 $1.60 $3.28 $69.215.10 $1.39 80 $87.42 40 $151.89 $105.58 $1.13 $92.914.868.16 $1.42 $51.25 $24.29 $92.50 $40.59 $2.169.313.47 $25.26 $49.18 $4.78 $56.32 $2.50 $52.988.821.13 $1.48 $778.49 $172.64 $34.57 120 $91.38 $3.

00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 160 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 40 $0.00 $0.00 120 $0.00 $0.00 $5 200 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 10% $0.00 $0.00 40 $0.00 $0.00 160 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 160 $0.00 $0.Table 7: ANNUAL LOST SALES COSTS Overseas Local unit price Capacity 100% $2 200 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Percent Demand Supplied from Overseas 70% 60% 50% 40% $0.00 90% $0.00 $0.00 $0.00 $0.00 $0.00 120 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 120 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 160 $0.00 $0.00 $0.00 $0.00 $7 200 $0.00 $0.00 $0.00 $0.00 $0.00 80% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 120 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 120 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $4 200 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 80 $0.00 $0.00 $0.00 $0.00 30% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 sales price= $13 20% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 40 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 40 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0% $0.00 $0.00 $0.00 $6 200 $0.00 120 $0.00 $0.00 $0.00 80 $0.00 $0.00 $0.00 $0.00 160 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $3 200 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 20 .00 l = 1.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 80 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 80 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 80 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 40 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 40 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 80 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 160 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.

505.257.826.50 $8.32 $10.377.319.745.31 $14.500.44 $18.471.13 $13.36 $18.09 $16.483.840.023.051.959.53 $18.132.447.16 $15.45 $18.749.544.670.696.842.02 $17.01 $15.99 $18.39 $15.581.16 $18.29 $8.552.84 $15.830.611.633.374.85 $12.297.57 $19.772.61 $20.15 120 $17.94 $13.520.342.56 $11.567.991.616.527.97 $18.452.58 $10.509.803.247.282.56 Percent Demand Supplied from Overseas 70% 60% 50% 40% 30% $10.313.645.61 $17.Table 8: TOTAL ANNUAL COST Overseas Local unit price Capacity 100% $2 200 $7.269.079.97 $15.47 80 $15.286.940.36 $18.77 $15.587.31 160 $15.852.608.28 $14.865.29 $10.83 $18.613.964.22 $11.462.654.88 $16.84 $20.702.84 $11.484.67 $18.92 $13.601.218.07 $18.987.515.45 $13.16 $15.175.19 $18.084.42 $14.39 $20.10 $13.874.47 $12.90 $18.92 $11.60 $16.333.864.74 $18.877.592.041.917.475.916.74 $14.83 $18.336.13 $18.46 20% $15.650.506.081.50 $13.563.288.32 $16.144.707.19 $13.08 80 $9.441.69 $16.75 $11.26 $16.58 40 $20.878.14 $16.950.471.35 $11.819.224.94 $15.98 $18.007.14 $18.43 $14.69 $11.791.35 $18.74 $15.456.82 $14.937.633.697.383.874.24 $11.876.214.395.29 $15.92 $16.860.679.78 $11.696.134.959.05 $17.11 $16.68 $18.108.71 $19.644.637.756.201.267.10 40 $10.18 $10.535.83 $15.315.146.40 120 $12.599.19 $15.81 $16.40 $19.37 $16.24 $11.65 $12.446.823.24 40 $7.79 $19.69 $12.75 $8.36 $16.247.99 $13.11 $9.83 $19.481.205.47 $18.784.02 120 $20.364.30 $14.54 $6 200 $17.73 $17.89 $16.400.98 $17.811.326.77 $15.908.51 $18.912.338.85 $16.635.534.72 $15.754.121.866.55 $19.295.032.391.50 $15.724.96 160 $20.136.62 $20.11 $16.81 $15.484.985.44 $18.927.803.79 $14.559.68 $18.823.23 $13.26 $17.892.27 120 $15.51 $15.86 $12.65 $11.29 $13.44 $14.048.779.43 $11.091.83 $17.266.65 $17.86 $15.723.541.530.76 $18.31 $16.45 $15.711.01 $20.778.22 $14.06 $18.227.101.14 $18.65 $13.26 $8.40 $17.58 $20.79 $17.627.796.281.66 $18.14 $14.66 $14.456.17 $16.918.07 $18.27 $18.82 $17.218.94 $13.07 $17.509.88 $12.312.369.28 $11.000.66 $12.08 $16.34 $20.401.87 $11.17 80 $17.07 $10.864.865.441.69 $19.14 $14.27 $14.817.485.514.161.512.997.915.609.42 $19.136.737.72 $20.706.765.348.27 $17.58 $13.341.64 $11.56 $11.229.50 $17.86 $18.346.441.197.688.557.66 160 $9.12 $18.52 120 $9.77 $21.634.904.899.66 $18.861.63 $10.075.756.167.39 80 $7.597.98 $19.054.792.95 $17.90 $18.398.48 $18.993.97 $8.73 $13.39 $15.86 $13.924.15 $17.763.077.937.70 $20.29 $12.25 $13.63 $13.983.72 $20.081.310.541.063.84 40 $15.70 $16.142.28 $16.354.83 $17.898.655.91 $16.66 $11.772.90 $19.02 $5 200 $15.710.033.898.31 $20.148.468.41 $14.899.954.136.737.84 $21.328.11 $11.98 40 $12.81 $13.71 $17.515.01 $17.78 $9.936.73 $17.10 $17.772.07 $17.993.09 $20.87 $14.68 $20.13 $19.96 $13.25 $8.282.294.79 $16.732.69 $15.848.47 $15.923.467.038.66 $14.420.727.662.104.817.11 $19.77 $13.43 $8.522.83 $19.79 $11.96 $12.457.80 $15.78 $19.89 $13.55 $13.551.89 $15.368.054.77 $11.909.938.32 $13.43 $14.962.52 10% $17.007.83 $16.52 $13.97 $17.05 $18.479.85 160 $7.67 $20.12 $18.867.403.76 $17.71 $14.745.17 0% $18.659.20 $8.440.935.260.826.132.99 $14.74 $15.09 $17.306.071.21 $13.019.44 $8.142.71 40 $18.56 $16.48 $4 200 $12.549.235.57 $18.06 $14.98 $15.568.748.671.20 $18.05 $17.15 $16.16 $19.360.88 $20.40 21 .365.428.22 $13.032.942.515.39 $15.302.791.74 $16.60 90% $8.163.00 $18.31 $15.023.14 160 $17.86 80 $20.92 $20.925.215.31 $10.615.010.31 $14.25 120 $7.75 $12.915.88 $17.560.894.011.729.231.016.451.56 $13.958.77 $18.635.585.69 $20.093.02 $12.465.435.67 $8.98 $14.16 $15.86 $19.07 $19.00 $16.29 $20.35 $8.38 $8.889.19 $13.72 $17.65 $17.27 $18.625.080.835.16 $12.09 $17.84 $16.518.92 $10.058.15 $10.281.37 $18.368.78 80 $12.49 $19.906.24 $17.229.872.723.74 $16.495.91 $9.562.67 80% $9.09 $12.344.53 $16.99 $19.207.24 $20.467.69 $10.046.233.355.918.472.538.515.185.075.53 $8.758.59 $20.902.36 $17.50 $20.277.08 $13.056.589.953.725.04 $17.808.49 160 $12.50 $12.07 $7 200 $20.152.96 $3 200 $9.07 $10.390.04 $14.42 $16.75 $14.91 $18.768.

450.97 $33.57 $3 200 $33.61 $33.924.344.99 $31.095.720.90 $28.333.06 40 $34.344.862.75 $33.28 $25.877.890.61 $33.40 160 $33.329.69 $34.877.788.18 $25.788.75 $33.874.039.071.13 $34.83 $33.877.931.924.51 $31.05 $16.61 $33.02 $33.61 $33.50 $28.931.46 $6.902.75 80 $33.071.47 $34.13 $34.51 $31.877.99 $31.874.02 $33.99 $31.61 $33.759.61 $33.862.720.61 $33.874.104.61 $33.902.96 $34.862.40 120 $33.99 $31.931.83 $33.517.788.135.61 $33.28 $25.35 $33.877.99 $31.61 $33.99 $9.039.06 40 $34.63 $30.35 $33.13 $34.877.877.61 $33.877.776.61 $33.50 $28.668.61 $33.06 40 $34.877.877.Table 9: TOTAL ANNUAL REVENUE Overseas Local unit price Capacity 100% 90% $2 200 $33.61 $33.344.23 $34.720.104.13 $34.04 $13.931.61 $33.03 $15.61 $33.96 $34.36 $32.69 $34.37 $22.36 $32.877.755.877.46 $6.73 $29.877.788.517.61 $33.03 $15.81 $18.897.46 $26.877.877.36 $32.788.045.877.877.668.104.104.61 $33.104.63 $30.02 $33.96 $34.820.615.877.862.877.61 $33.23 $19.61 $33.18 $25.57 $33.52 $16.61 $33.862.549.000.526.10 $20.61 $33.73 $29.095.833.902.61 $33.329.103.591.877.61 $33.889.329.90 $28.40 160 $33.99 $9.897.61 $33.902.04 $13.862.69 $34.57 $33.23 $34.703.877.81 $18.40 $33.36 $32.591.333.08 $33.61 $33.877.08 $33.35 $33.405.329.104.591.08 $23.63 $30.104.57 $12.46 $26.931.820.61 $33.18 $25.877.877.40 120 $33.877.57 $33.61 $33.877.52 $16.97 22 .877.90 $28.61 $33.589.40 $33.405.591.877.329.61 $33.945.10 $20.46 $6.032.000.877.874.61 $33.61 $33.037.37 $22.924.23 $34.720.40 $33.40 120 $33.61 $33.945.04 $13.897.90 $28.81 $18.23 $19.329.90 $28.877.00 Percent Demand Supplied from Overseas 70% 60% 50% 40% 30% 20% 10% 0% $33.82 $27.000.23 $19.57 $33.589.862.02 $33.877.902.46 $9.02 $22.63 $30.755.61 $33.877.61 $33.73 $29.61 $33.137.18 $25.61 $33.41 $33.50 $28.668.759.333.931.40 160 $33.61 $33.755.591.759.75 $33.83 $33.897.61 $33.96 $34.57 $12.820.61 $33.23 $19.877.945.61 $33.405.46 $26.75 $33.36 $32.51 $31.73 $29.890.61 $33.450.81 $18.039.40 $33.51 $31.104.37 $22.97 $33.69 $34.82 $27.02 $22.877.61 $33.668.862.862.61 $33.10 $20.759.137.57 $7 200 $33.07 $30.50 $28.61 $33.776.61 $33.032.137.902.833.69 $34.032.61 $33.03 $15.28 $25.61 $33.295.61 $33.267.877.03 $15.037.874.877.61 $33.344.862.877.61 $33.61 $33.897.73 $29.57 $12.450.35 $33.267.874.877.61 $33.589.73 $29.862.08 $23.877.039.333.924.877.877.104.18 $25.137.344.776.095.897.135.82 $27.23 $34.877.344.862.755.40 $33.668.267.40 $33.945.874.75 80 $33.945.83 $33.877.46 $26.10 $23.877.61 $33.877.720.57 $5 200 $33.877.877.57 $33.833.61 $33.071.99 $9.57 $12.032.874.61 $33.877.40 160 $33.81 $18.589.877.755.08 sales price = $13.924.877.405.75 80 $33.06 40 $34.08 $33.877.833.36 $32.135.877.874.000.61 $33.095.104.97 $33.08 $23.52 $16.889.267.46 $26.03 $15.890.450.135.517.032.46 $26.776.63 $30.61 $33.875.96 $34.862.61 $33.877.40 120 $33.52 $16.57 80% $33.97 $33.82 $27.40 120 $33.90 $28.61 $33.889.10 $20.61 $33.75 80 $33.135.96 $34.06 40 $34.04 $13.877.10 $20.61 $33.02 $22.35 $33.61 $33.02 $33.877.526.820.071.517.450.57 $12.938.23 $34.23 $34.40 $33.820.40 $33.776.40 160 $33.877.61 $33.57 $6 200 $33.877.877.333.877.02 $22.61 $33.874.37 $22.720.877.40 $33.890.037.589.40 $33.08 $23.40 160 $33.90 $28.04 $13.40 $33.02 $22.83 $33.51 $31.095.61 $33.69 $34.97 $33.862.037.517.862.862.61 $33.61 $33.938.50 $28.759.862.02 $33.37 $22.137.877.877.877.862.877.890.28 $25.000.833.889.862.877.40 $33.61 $33.862.61 $33.23 $19.46 $6.938.61 $33.095.877.08 $23.526.81 $18.526.82 $27.071.23 $19.333.877.938.877.589.405.04 $13.75 $33.104.889.57 $4 200 $33.135.755.61 $33.862.862.668.61 $33.071.75 $33.267.039.52 $16.877.61 $33.874.20 $33.938.03 $15.877.877.99 $9.137.75 80 $33.820.61 $33.877.877.13 $34.57 $12.99 $31.83 $33.51 $31.877.032.877.61 $33.28 $25.788.037.517.61 $33.61 $33.877.28 $25.924.99 $9.862.02 $22.61 $33.945.61 $33.386.776.46 $6.862.61 $33.874.000.526.46 $6.08 $33.889.37 $22.450.82 $27.06 40 $34.40 120 $33.61 $33.18 $25.61 $33.61 $33.75 80 $33.037.10 $20.877.877.890.08 $33.938.

13 120 18656.43 23 .69 $6 200 16113.93 14350.62 19662.27 $3 200 23963.86 15710.23 6856.10 14791.24 3686.38 16050.38 120 13422.52 6170.25 12424.52 Percent Demand Supplied from Overseas 70% 60% 50% 40% 30% 23339.63 15883.39 12988.60 18570.70 4288.26 19675.55 21507.96 19879.46 4269.37 1796.08 23116.91 15348.46 15920.24 17810.56 15870.83 24410.35 16035.00 -5009.31 40 16187.85 12372.53 18579.77 15473.50 16917.05 13486.93 15097.78 14866.53 12865.58 80 16083.00 15968.15 14113.53 10% 16853.67 8684.89 20% 17940.90 9283.89 80 13467.84 22335.91 160 21318.05 24358.65 21474.85 12900.22 11667.57 19092.53 22265.87 17539.44 40 13565.09 20223.36 80 26546.79 1204.11 18148.80 13541.39 -9378.72 1150.42 -1277.73 11169.07 14779.42 -1876.65 25472.86 15502.25 22631.44 18876.98 20242.28 6100.57 11708.11 15918.17 15982.48 16071.77 22280.88 15806.09 160 18701.82 13695.32 20711.80 19620.95 19642.59 22199.57 15999.34 -14376.27 9843.26 17734.56 15281.91 18352.40 9961.88 7393.78 16962.93 5501.52 11126.50 16857.83 13906.74 160 23934.88 120 23889.84 18166.31 7386.30 23326.77 2991.97 80 21315.94 -4380.34 18153.92 9293.28 10403.79 -6875.63 90% 25493.32 20060.09 7931.00 120 21272.75 602.99 17489.49 -3730.04 14381.41 8075.79 13026.74 7953.00 14094.26 160 16084.27 -11877.63 588.74 19109.59 7335.01 17155.18 5540.47 19029.38 -5647.42 20663.94 4833.87 11047.04 5567.07 20782.84 -45.16 $7 200 13496.11 18962.71 11592.88 23138.96 13576.44 160 13467.95 21494.70 11733.43 -8747.04 21200.75 4266.59 -2506.44 9240.48 13941.07 -691.65 2438.42 3052.08 8618.33 13629.18 -3771.94 17206.96 22316.27 14648.32 17810.56 3031.13 13643.31 1832.13 -6879.32 21188.23 6674.09 -1847.45 16000.22 18129.35 15399.92 40 24051.78 15914.71 0% 15475.40 -1881.19 16189.28 18426.13 -6259.46 17227.83 -3173.51 15997.15 120 26506.03 20187.46 17415.21 15924.25 120 16039.41 16589.05 17674.29 23039.24 10495.85 11024.34 18951.62 20679.97 6765.14 14180.73 1749.97 15986.69 23305.67 6168.17 11220.89 15952.73 17522.78 40 26673.87 14231.49 18079.30 20706.56 7546.80 17242.77 14332.08 5503.Table 10: TOTAL ANNUAL PROFIT Overseas Local unit price Capacity 100% $2 200 26580.62 9965.12 12842.06 20629.77 23066.05 17456.73 -11235.39 19012.02 20172.66 15795.03 15958.65 6813.19 560.78 17843.48 -1283.81 18536.70 8609.52 21154.12 14398.21 $5 200 18730.78 18010.17 9902.04 40 21430.29 15269.30 18093.09 12303.19 2478.35 17380.75 14609.90 9761.81 20596.88 23618.20 25422.35 8539.02 16364.69 15443.90 15952.52 15979.61 16324.08 25415.67 80 23930.77 25481.34 16670.82 14147.46 16890.50 22250.53 19059.03 19904.26 22233.56 8068.21 -3145.36 -22.58 9205.43 10511.28 19890.68 15531.39 13960.08 15314.71 21761.18 1293.79 19057.25 17261.67 16471.80 20105.07 -8120.29 20120.62 14822.87 4386.18 40 18808.85 15023.69 13715.27 3718.34 4874.34 15809.78 17269.64 16060.50 24374.19 16332.71 11822.04 10493.52 15839.54 14643.17 19845.85 16595.91 14067.01 13645.25 12376.90 80% 24429.51 15385.63 14167.31 -700.42 10577.55 160 26552.40 16012.29 17830.38 13267.25 16054.61 18046.68 23061.28 80 18699.95 18405.75 18242.80 16522.09 2412.25 14756.96 15998.45 17965.47 4943.41 14661.60 15414.21 20769.89 18355.98 8683.67 -4966.75 $4 200 21346.51 20761.46 13893.35 3731.

88 120 0.01 0.60 $4 200 0.01 0.96 0.92 0.88 0.89 0.88 0.05 0.88 80 0.00 0.91 0.78 0.03 0.92 0.01 0.87 0.01 0.92 0.11 0.00 0.94 0.01 0.11 0.84 0.89 0.22 0.97 0.01 0.12 0.00 0.01 0.97 0.00 0.01 0.03 0.00 0.86 40 0.01 0.01 0.74 0.05 0.94 0.00 0.00 0.12 0.00 0.03 0.03 0.88 0.00 0.88 0.92 0.84 0.03 0.00 0.78 0.00 0% 0.88 0.12 0.05 0.00 24 .92 0.78 0.05 0.00 0.88 0.87 0.00 0.05 0.88 120 0.01 0.89 0.03 0.79 0.00 0.91 0.88 120 0.00 0.12 80% 0.43 0.00 20% 0.89 0.00 0.88 0.88 120 0.91 0.88 0.00 0.00 0.00 0.22 0.43 0.90 0.01 0.60 $3 200 0.60 $6 200 0.88 0.79 0.87 0.00 0.88 160 0.91 0.00 0.91 0.05 0.00 0.92 0.11 0.00 0.43 0.00 0.22 0.00 0.87 0.86 40 0.03 0.91 0.89 0.79 0.88 0.91 0.00 0.97 0.74 0.00 0.88 0.86 40 0.03 0.00 0.91 0.91 0.88 80 0.00 0.91 0.91 0.00 0.88 160 0.91 0.00 0.74 0.01 0.05 0.96 0.94 0.00 0.88 0.90 0.00 0.91 0.94 0.84 0.88 0.03 0.88 160 0.00 0.00 0.03 0.88 120 0.00 0.86 40 0.90 0.00 0.00 0.00 0.92 0.03 0.91 0.95 0.88 0.00 30% 0.01 0.89 0.88 160 0.96 0.00 0.95 0.92 0.97 0.91 0.86 40 0.00 0.00 0.89 0.03 0.95 0.89 0.01 0.01 0.95 0.00 0.88 80 0.01 0.00 0.84 0.01 0.94 0.90 0.01 0.01 0.00 0.88 0.11 0.91 0.60 90% 0.05 0.03 Percent Demand Supplied from Overseas 70% 60% 50% 40% 0.92 0.88 80 0.01 0.86 40 0.91 0.00 0.92 0.12 0.88 80 0.01 0.00 0.91 0.22 0.92 0.96 0.92 0.00 0.91 0.79 0.88 0.89 0.78 0.94 0.88 0.00 10% 0.91 0.88 0.01 0.88 0.03 0.12 0.88 0.01 0.00 0.92 0.89 0.00 0.88 160 0.90 0.91 0.87 0.89 0.Table 11: DEMAND FILL RATE Overseas Local unit price Capacity 100% $2 200 0.96 0.03 0.91 0.00 0.60 $7 200 0.00 0.00 0.97 0.84 0.88 120 0.43 0.88 80 0.87 0.95 0.43 0.89 0.95 0.92 0.00 0.74 0.11 0.96 0.00 0.92 0.00 0.22 0.01 0.22 0.84 0.00 0.01 0.11 0.88 0.88 0.03 0.00 0.03 0.79 0.03 0.01 0.89 0.00 0.92 0.00 0.88 160 0.88 0.00 0.74 0.89 0.60 $5 200 0.00 0.05 0.74 0.05 0.97 0.90 0.01 0.78 0.00 0.78 0.88 0.89 0.89 0.00 0.01 0.89 0.91 0.89 0.79 0.00 0.05 0.05 0.00 0.00 0.92 0.92 0.91 0.43 0.01 0.00 0.

816.850.11 $8.124.289.03 40 $17.07 $5.45 $9.885.715.08 120 $7.63 $9.77 $11.082.738.826.017.560.71 $10.867.46 $6.20 $6 200 $17.49 $4.771.143.658.65 $14.458.591.173.00 $16.479.09 $10.23 $19.076.456.67 $16.306.35 $7.151.33 $19.89 $8.623.695.421.34 80 $9.824.71 $6.99 $15.083.18 $12.072.503.539.78 $13.802.961.47 $16.59 $12.119.53 $19.51 $13.139.384.35 160 $9.880.218.034.99 $12.770.326.40 $14.267.704.46 $15.858.995.846.320.36 $17.44 $11.776.571.19 $18.762.31 $13.958.23 $17.771.333.72 $12.53 $17.523.669.13 $9.39 $7.405.27 $10.53 $16.885.640.82 $11.34 40 $9.385.95 $13.19 $15.640.524.968.74 $16.99 $8.305.96 $12.88 $19.342.83 $15.50 $3 200 $9.88 $15.38 $13.906.907.400.89 $15.186.071.641.54 $11.625.110.51 $11.03 $17.63 $14.76 $19.60 $11.94 $14.669.638.609.436.780.056.01 10% $17.82 $13.134.69 $14.46 $11.09 $4.574.630.67 $13.07 $7.137.47 $14.34 $10.522.847.914.67 $8.94 $8.661.42 $15.118.28 $19.693.932.951.537.00 $18.814.054.02 $12.32 $14.91 $4.470.63 $14.948.36 $12.32 $5.126.956.80 80 $14.48 $15.670.673.13 $17.78 120 $14.479.161.607.93 $17.99 $9.44 $16.51 $8.596.886.503.221.21 $10.68 $16.210.86 $7.230.86 $7.46 $18.607.913.660.35 $16.89 $12.626.82 $15.81 $7.591.436.479.46 $15.57 40 $11.389.67 $4.21 $12.46 $11.82 $17.461.09 $17.217.698.21 $15.987.72 $17.78 $11.16 $3.342.64 $17.60 $19.46 $11.340.062.29 $17.12 $17.436.24 120 $20.03 $19.69 $13.933.063.11 $13.498.883.116.383.80 $10.745.601.74 $17.93 $19.880.60 $16.118.573.996.950.953.448.73 $5.304.429.42 $12.463.16 $15.059.87 0% $18.89 $7.528.58 160 $12.28 $14.607.52 $13.342.83 $12.65 $16.18 $14.82 $18.342.779.66 $12.40 $16.059.30 $13.91 $11.991.953.16 $3.08 $4.86 $18.50 $11.436.03 $19.355.73 $5.61 $15.13 $9.247.245.798.982.08 $11.23 $16.61 $10.47 $12.568.20 $13.059.31 120 $9.404.66 $15.698.496.059.558.78 $11.71 $16.09 $12.805.011.43 $5.81 $10.34 $8.220.89 $15.890.16 $3.525.661.91 $14.801.530.064.416.07 $13.121.55 $19.64 $13.21 $7.14 $15.731.38 $17.43 $9.01 120 $17.67 $18.55 $12.47 $13.553.640.541.86 $7.796.16 $3.77 $18.881.63 $14.269.529.49 $12.215.369.80 40 $14.953.225.901.282.83 $14.97 $5 200 $14.56 $14.10 $15.177.178.704.123.18 $11.694.092.970.303.059.06 $17.175.26 40 $19.81 $8.78 $11.117.73 $4 200 $12.88 $16.10 80 $7.630.738.097.202.63 $14.497.090.724.412.225.26 80 $20.159.69 $17.342.085.80 $15.920.607.016.786.480.919.098.62 $12.838.555.24 $11.211.240.837.05 $18.440.06 $12.63 $19.059.76 $14.554.34 $17.928.54 $17.13 $19.689.736.00 $17.53 $16.935.99 $8.642.872.04 160 $17.746.150.12 $15.28 $19.283.31 $8.55 $6.81 $9.881.71 $8.190.597.656.739.11 $9.989.854.56 $14.262.274.47 $17.01 $12.640.503.663.304.86 $7.253.02 $15.10 $16.118.03 $9.63 $14.470.52 $17.124.850.80 $18.799.074.94 $18.84 $17.01 $7.962.38 $17.38 $10.306.708.52 $8.Table 12: ANNUAL TRANSPORTATION AND PURCHASING COSTS Overseas Local Percent Demand Supplied from Overseas unit price Capacity 100% 90% 80% 70% 60% 50% 40% 30% $2 200 $7.47 $13.43 $7 200 $20.118.829.12 $16.705.81 $8.00 $13.27 $18.255.38 $19.57 80 $12.005.698.96 $12.969.95 $9.445.36 $14.640.812.83 $6.48 $8.46 $14.61 $10.74 $17.23 $17.13 $16.10 40 $6.53 $19.00 $18.37 $6.939.136.18 $19.31 $17.748.394.59 $12.30 $15.91 $10.09 $9.63 $14.16 $3.02 $18.16 $9.342.702.92 $12.647.281.564.60 $11.53 $14.552.46 $11.08 $9.91 $5.83 $11.915.78 $5.415.376.57 $18.00 $18.187.335.81 160 $14.176.716.76 $17.17 $16.26 $14.532.72 $16.90 $16.698.816.42 $15.753.506.00 $18.86 $7.73 $12.390.03 80 $17.933.118.16 $3.927.42 $15.632.415.86 $17.675.589.27 160 $20.91 $10.21 $9.156.512.694.91 $17.42 $13.413.330.471.91 $9.22 $12.245.287.71 $15.04 $15.19 $7.43 $16.00 25 .09 $9.11 160 $7.831.46 $11.716.956.04 $10.46 $17.049.041.532.46 $11.72 $8.469.63 $9.54 $15.49 $11.55 120 $12.726.61 $12.698.86 $7.118.61 $14.207.40 $17.52 $13.66 20% $15.59 $17.65 $13.336.470.37 $19.726.49 $10.269.47 $16.81 $14.021.00 $18.75 $6.66 $14.346.698.640.745.288.045.56 $15.32 $12.386.14 $10.

67 $158.97 $121.53 $43.64 $94.60 $38.16 $33.75 $97.06 $42.57 $49.22 $48.06 $98.21 10% $11.57 40 $136.04 $71.62 $157.35 $171.98 $27.05 $42.24 $58.07 40 $109.48 40 $164.68 $63.94 $56.46 $39.67 $74.40 40 $191.90 $82.82 $122.39 $129.45 $5 200 $153.57 $110.32 $78.90 $39.33 160 $183.74 $119.62 $64.38 $68.68 26 .81 $32.06 $17.37 $58.43 $135.93 $123.03 $67.39 $95.34 $124.14 $98.46 $45.88 $86.97 $54.83 $102.19 $48.11 160 $153.01 $48.59 $121.95 $81.07 $62.17 $62.71 $31.31 $34.89 $101.86 $49.22 $49.02 $131.91 $88.08 $95.28 $66.18 $41.57 $39.61 $77.17 $119.51 $194.53 30% $21.49 $193.29 $32.43 $24.47 $51.63 $105.28 $86.33 $74.40 $97.79 $51.52 $29.66 $49.89 $66.79 $43.30 $117.42 $104.38 $112.38 $97.58 $53.80 $78.41 $67.58 $111.82 $93.59 $23.50 $55.44 $31.26 $74.70 $117.93 $83.98 120 $91.16 $39.71 $3 200 $91.52 $114.67 160 $91.48 $89.78 $63.54 $111.64 $29.91 $83.34 $37.06 $69.71 $67.84 $93.05 $109.96 $67.68 $147.98 $40.73 $103.10 80 $177.93 $82.80 $22.96 $26.80 $166.81 $6 200 $183.42 $50.21 $72.01 $47.74 40 $82.18 $95.70 $47.75 120 $214.09 $74.22 $138.29 $55.58 $147.56 $146.46 $107.79 $150.23 $183.84 $80.94 $92.61 $56.19 $34.31 $78.27 $59.86 $166.97 $52.75 $50.99 120 $61.35 $79.67 $116.90 $83.96 120 $183.73 $19.81 $32.53 $49.64 $37.80 $43.05 80 $88.77 $62.14 $162.58 $107.55 160 $214.59 $86.20 $93.74 80 $118.43 $69.14 $62.71 $33.61 $45.89 $62.60 $29.34 $64.Table 13: ANNUAL INVENTORY HOLDING AND BACKLOG COSTS Overseas Local Percent Demand Supplied from Overseas unit price Capacity 100% 90% 80% 70% 60% 50% 40% $2 200 $61.44 $194.09 $143.87 $110.39 $31.60 $46.58 $63.44 $36.33 $93.97 120 $153.53 $52.89 $94.07 $130.36 $83.56 $136.38 $37.99 $92.68 $29.58 80 $207.72 $148.88 $98.06 $42.75 $56.60 $29.65 $137.14 $79.07 $117.73 $56.74 $25.16 $37.09 $4 200 $122.83 40 $54.13 $39.40 $97.23 $22.62 $69.21 $77.22 $53.31 $73.40 $139.37 80 $59.45 $41.03 $21.17 $138.16 $126.19 $59.45 $44.67 $124.67 $78.94 $95.77 $63.30 $30.50 $87.61 $26.16 $170.19 $35.99 $107.20 $24.02 $95.95 $90.44 $97.23 $81.05 $58.01 $111.72 $69.47 $112.69 $111.17 $7 200 $214.47 $46.81 $78.28 $55.20 $31.62 $103.05 $131.61 $73.48 $79.83 $100.42 $40.03 $80.05 $109.28 $74.09 $47.69 $56.42 80 $148.18 $130.92 $83.38 $43.78 $73.91 $93.49 $100.13 $37.05 $87.27 $55.81 20% $16.44 $167.21 $137.57 $87.77 $86.07 $145.48 $15.50 $172.85 $58.16 $37.15 $15.10 $64.29 $53.95 $130.98 $85.42 $52.48 $117.84 $151.55 $32.66 $37.33 $49.72 $20.20 $59.19 $112.33 $66.58 $65.21 $52.94 $104.58 $102.84 $113.94 $49.12 $29.44 160 $61.34 $31.06 $19.38 $71.42 $52.11 $24.36 $74.97 $27.65 $35.08 $64.51 $56.32 $74.48 $45.29 $73.89 160 $122.71 $26.15 $129.07 $31.19 $64.31 $75.94 $33.20 $69.46 $41.98 120 $122.71 0% $10.10 $84.12 $73.85 $165.49 $112.17 $46.41 $40.

36 $1.20 $1.86 $842.02 $2.68 $2.00 $0.00 $4.36 $3.20 $1.60 $11.00 $0.00 $4.18 $116.191.132.00 $0.00 $0.00 $13.00 160 $0.20 $577.08 $7.879.00 $0.00 $13.00 $13.00 $0.98 $0.98 $2.54 $18.54 $18.581.00 $0.98 $168.01 $3.424.18 $116.56 $3.20 $1.48 $306.90 $2.00 $0.60 $2.00 $0.98 $0.98 $168.00 $0.592.592.00 $0.60 $2.00 $0.01 $3.80 $7 200 $0.98 $0.36 $1.68 $83.60 80 $9.08 $7.54 $18.98 $2.01 $3.01 $3.72 $5.532.20 $1.68 $83.00 160 $0.60 $2.72 $5.20 $1.718.10 $275.88 $18.295.98 $0.48 $699.00 $2.132.54 $18.00 $0.532.68 $0.68 $0.36 $1.40 $1.592.00 $0.843.08 $7.01 $3.44 $4.90 $2.718.668.98 $2.123.98 $168.54 $18.00 120 $0.36 $1.843.44 $4.10 $275.98 $87.20 $577.10 $275.00 160 $0.00 $0.68 $2.00 $2.00 $0.60 80 $9.00 $0.00 $2.56 $3.581.98 $2.98 l = 0.276.52 $2.879.40 $1.00 $0.60 $11.36 $3.00 $0.46 40 $181.417.56 $3.82 $4.295.843.08 $7.10 $275.132.18 $2.581.00 $0.80 $6 200 $0.00 $2.00 $2.18 $2.00 $0.00 $2.60 $2.581.123.40 $1.18 $984.123.56 $3.46 $1.56 $3.18 $116.48 $699.82 $4.00 $0.00 $2.40 $1.00 120 $0.80 80% $0.00 $0.36 $3.417.46 40 $181.68 $0.00 $0.18 $2.68 $83.60 80 $9.276.00 $0.424.44 $4.879.60 $11.18 $2.018.00 120 $0.123.276.295.00 $0.276.00 160 $0.72 $5.Table 14: ANNUAL LOST SALES COSTS Overseas Local unit price Capacity 100% 90% $2 200 $0.00 $0.48 $306.88 $18.718.48 $699.20 $1.254.18 $116.18 $984.46 $1.00 $0.98 $87.68 $83.08 $7.424.424.68 $2.00 $0.132.00 $0.254.00 $0.295.86 $842.254.60 $11.00 $13.00 120 $0.18 $984.68 $0.00 $2.18 $116.14 $1.80 $4 200 $0.00 $0.018.88 $18.52 $2.00 $0.88 $18.82 $4.592.00 $0.74 $440.00 $0.018.86 $842.74 $440.005.00 $2.424.01 $3.20 $577.00 120 $0.843.00 $0.592.48 $306.00 160 $0.48 $306.00 160 $0.56 $3.00 $4.14 $1.36 $3.90 $2.68 $0.00 $0.18 $984.00 $0.36 $3.36 $1.00 $0.14 $1.668.718.018.005.843.02 $2.00 $0.254.46 $1.532.90 $2.20 sales price= $13 Percent Demand Supplied from Overseas 70% 60% 50% 40% 30% 20% 10% 0% $0.00 $0.00 $0.46 40 $181.74 $440.88 $18.54 $18.52 $2.879.718.98 $2.879.48 $699.417.74 $440.86 $842.98 $168.005.00 $0.20 $577.132.005.86 $842.10 $275.00 $0.82 $4.36 $3.191.123.191.52 $2.00 120 $0.18 $2.191.417.532.00 $0.60 $2.276.48 $699.68 $83.86 $842.123.417.254.00 $0.48 $306.254.00 $13.00 $0.46 $1.44 $4.40 $1.68 $2.10 $275.98 $87.02 $2.00 $0.00 $0.80 $5 200 $0.00 $0.132.581.14 $1.02 $2.00 $0.00 $0.90 $2.60 $2.72 $5.668.48 $306.08 $7.98 $87.60 80 $9.191.60 80 $9.14 $1.98 $0.295.98 $87.00 $0.20 $577.00 $2.20 $577.00 $0.00 $2.18 $984.18 $984.00 $0.90 $2.424.00 $0.68 $2.02 $2.005.44 $4.68 $2.00 $2.00 $0.60 $11.00 $4.417.295.46 $1.00 $13.48 $699.46 40 $181.14 $1.68 $83.592.72 $5.60 80 $9.60 $11.74 $440.00 $4.532.276.98 $2.52 $2.718.00 $0.668.74 $440.191.00 $0.46 40 $181.00 $0.88 $18.18 $2.00 $0.98 $87.00 $0.00 $0.46 40 $181.018.36 $1.532.72 $5.82 $4.02 $2.018.98 $168.18 $116.668.668.00 $0.80 $3 200 $0.005.44 $4.879.40 $1.46 $1.00 $0.52 $2.581.98 $168.82 $4.00 $0.00 $4.68 27 .843.

768.304.126.320.627.744.93 $12.57 $18.560.346.59 $17.055.95 $11.04 $17.841.69 $15.989.89 $14.299.472.419.236.227.44 $13.167.82 $8.12 $19.196.433.37 $17.48 $17.422.25 $15.611.97 $12.680.570.814.894.82 $11.244.65 $12.77 $14.37 $14.893.37 $13.13 $15.776.882.88 $20.46 $11.534.54 $13.91 $11.50 $8.07 160 $20.60 $17.19 $3 200 $9.844.82 $10.70 $13.84 $13.23 120 $15.20 $12.013.093.32 40 $12.773.730.867.84 $8.83 $19.800.70 $16.352.451.89 $17.535.92 $15.149.279.27 $12.208.54 $17.05 $12.023.77 $15.52 $14.31 80% $9.76 $8.02 40 $14.736.49 $16.35 $16.38 $15.92 $16.58 $17.366.162.960.75 $14.522.55 $11.23 $17.47 $16.16 $11.282.61 $16.927.45 $19.443.63 $4 200 $12.457.82 $15.129.035.52 $10.13 $13.52 $12.661.368.32 $16.71 $17.995.151.532.351.679.73 $19.452.00 $16.674.87 $13.02 $18.031.89 $17.121.790.249.024.72 120 $20.40 $19.692.685.30 0% $18.331.780.784.876.49 120 $12.46 $13.86 160 $12.26 $14.844.595.96 $13.13 $16.850.011.71 $14.97 $11.27 $16.451.524.74 $11.47 $18.28 $10.713.07 $11.997.676.263.74 120 $9.83 $10.75 $9.151.68 $15.353.365.95 $13.820.142.362.145.88 $11.00 $8.71 $10.27 $12.749.023.23 $19.36 $18.33 160 $17.60 $13.17 $10.585.505.147.17 $14.19 $13.50 $20.31 $8.715.003.632.48 $13.830.611.54 80 $20.353.48 $17.62 $19.77 $16.42 $18.855.621.896.301.80 80 $7.99 $14.41 $17.39 $19.688.653.004.21 $8.55 $17.05 $8.18 $11.080.46 $16.86 $15.985.53 $11.721.940.60 $12.999.124.34 $14.747.79 $15.08 $16.49 $11.303.17 $10.239.71 $12.85 $17.903.55 $15.716.08 $16.51 $9.02 $14.847.56 $19.07 $13.07 $16.68 $15.95 $12.324.354.994.453.86 $14.67 $20.00 $7 200 $20.36 $13.99 $9.31 $12.22 $15.06 $10.01 $11.53 $18.90 40 $6.99 $8.79 80 $17.90 $13.070.77 $17.970.96 $14.784.36 $15.353.08 $14.901.76 $10.23 $17.283.547.59 160 $15.60 $17.764.924.816.882.38 160 $7.773.48 $8.891.457.35 $19.424.49 $12.15 $11.30 $10.19 $18.74 $13.38 $14.703.148.54 80 $9.32 $16.02 $17.152.049.611.45 90% $8.423.313.32 $14.278.99 $19.02 $13.580.50 $12.069.902.90 $16.17 $17.960.276.49 $15.29 $10.419.806.15 $13.356.897.47 $15.44 40 $19.30 80 $12.184.060.821.04 $16.64 $18.45 $10.204.081.33 $9.93 $11.20 $12.072.023.061.757.971.128.007.85 $12.443.350.564.69 $13.695.99 $16.913.889.713.00 $10.29 $11.845.753.82 $13.467.015.820.85 $13.379.09 $5 200 $15.418.719.168.40 $18.777.739.48 $14.76 $14.626.07 $7.774.64 $11.630.04 80 $15.895.17 $11.09 $8.15 $12.897.423.91 20% $15.92 $15.05 $17.08 $11.530.52 $13.45 $15.947.62 $18.420.54 $6 200 $17.38 $17.83 $16.15 $17.92 $15.391.92 $19.622.67 $10.279.67 $17.713.23 $14.775.92 $15.98 120 $17.509.719.713.66 $17.964.95 $10.39 $16.712.738.507.282.505.333.294.363.32 $9.990.622.375.438.52 $9.41 $17.89 $13.17 $11.878.49 $9.713.227.36 28 .25 $14.95 $13.84 $13.283.551.695.506.016.179.757.56 $13.44 $20.344.49 $16.07 $9.21 $15.500.31 $15.425.81 $9.165.418.05 $11.431.43 $13.73 40 $17.18 $11.157.516.998.76 $10.223.68 $15.122.73 $19.96 $9.666.183.737.04 10% $17.457.10 $8.451.180.817.132.037.036.96 $17.070.07 $15.516.012.888.84 $15.035.325.962.99 $19.41 $19.287.05 $14.94 $10.913.175.20 $12.63 $14.128.577.93 $8.070.458.228.06 $15.298.935.88 $16.12 $17.95 $16.91 $16.119.510.67 $19.52 $11.761.98 $15.09 $10.263.806.16 $18.168.30 $11.605.851.702.658.76 $16.59 $18.866.44 $16.02 $8.606.28 Percent Demand Supplied from Overseas 70% 60% 50% 40% 30% $10.412.319.827.360.311.76 $16.29 $8.085.539.53 $17.70 $14.638.36 $14.708.686.507.12 $18.769.241.82 $9.11 160 $9.95 $13.24 $17.460.117.021.03 $12.211.97 $9.73 $13.43 $17.828.88 $18.66 $13.74 $17.357.636.74 $18.508.130.58 $15.203.76 $13.871.99 120 $7.574.87 $19.604.Table 15: TOTAL ANNUAL COST Overseas Local unit price Capacity 100% $2 200 $7.230.166.601.53 $13.808.162.196.066.45 $16.50 $8.49 $14.58 $13.905.514.35 $16.777.855.48 $13.919.805.95 $12.95 $17.83 $16.072.334.619.235.68 $13.508.09 $12.56 $8.809.811.50 $15.60 40 $9.37 $17.338.881.96 $10.80 $17.62 $18.698.515.735.52 $11.75 $16.93 $14.31 $17.19 $12.019.76 $13.

862.56 $32.877.919.492.874.40 120 $33.039.44 $33.716.31 $33.919.27 $29.043.877.877.526.40 $33.309.877.26 $25.56 $32.267.941.63 $30.56 $32.16 $30.591.13 40 $32.61 $33.61 $33.951.043.58 80 $33.919.40 $33.31 $33.833.40 160 $33.877.57 $33.61 $33.87 $33.863.53 $31.52 $16.877.61 $33.877.877.40 160 $33.969.31 $33.919.877.877.298.802.08 $33.104.36 $32.104.755.13 $33.61 $33.860.67 $12.08 $33.30 $22.61 $33.877.872.50 $27.13 40 $32.66 $19.951.11 $28.676.863.989.41 $18.61 $33.61 $33.94 $33.31 $33.830.862.793.669.58 $21.267.40 $33.61 $33.862.13 40 $32.716.03 $6.14 $27.41 $18.877.53 $31.863.26 $25.716.08 $23.941.40 $33.676.830.881.03 $6.13 $33.40 120 $33.Table 16: TOTAL ANNUAL REVENUE Overseas Local unit price Capacity 100% 90% $2 200 $33.65 $15.298.61 $33.471.492.830.46 $26.863.27 $29.596.830.755.40 $33.596.471.02 $33.99 $20.44 $33.61 $33.669.99 $9.877.877.877.61 $33.75 $33.97 $33.53 $31.393.591.877.03 $6.61 $33.877.309.41 $18.36 $32.596.877.11 $33.043.50 $27.03 $6.596.298.40 $33.35 $25.61 $33.61 $33.877.61 $33.862.52 $16.951.63 $30.591.877.08 $23.57 $33.591.755.471.58 $21.61 $33.862.020.802.61 $33.863.039.941.863.50 $27.61 $33.596.99 $9.99 $9.424.267.793.877.40 160 $33.65 $15.35 $25.50 $27.40 $33.40 $33.826.75 $33.66 $19.802.877.802.862.951.793.104.877.298.99 $20.309.63 $30.862.759.989.53 $31.298.877.61 $33.309.951.826.27 $29.969.16 $30.863.75 $33.35 $25.526.94 $33.66 $19.56 $32.862.020.039.676.26 $25.61 $33.87 $33.16 $30.830.61 $33.874.97 $33.877.46 $26.14 $27.58 $21.424.877.08 $23.877.61 $33.35 $33.31 $33.862.860.588.46 $26.61 $33.862.61 $33.78 $13.877.14 $27.020.36 $32.16 $30.863.862.99 $9.61 $33.67 $12.11 $33.94 $33.759.591.08 $33.11 $33.31 $33.02 $33.864.669.716.67 $12.94 $33.35 $33.877.941.020.13 $33.40 160 $33.862.877.58 $21.40 $33.826.424.61 $33.97 $33.65 $15.669.833.35 $25.75 $33.87 $33.61 $33.40 160 $33.57 $33.267.591.44 $33.30 $22.40 $33.13 40 $32.99 $9.862.309.588.87 $33.61 $33.40 120 $33.97 $33.99 $20.941.87 $33.31 $33.053.676.424.31 $33.864.877.863.52 $16.860.63 $30.61 $33.67 $12.40 160 $33.862.877.63 $30.862.27 $29.58 80 $33.13 $33.267.405.61 $33.87 $33.863.61 $33.13 40 $32.877.053.61 $33.877.872.61 $33.833.669.16 $30.755.755.526.864.405.26 $25.61 $33.99 $20.61 $33.61 $33.862.61 $33.864.877.424.405.877.14 $27.61 $33.872.31 $33.872.61 $33.41 $18.50 $27.877.36 $32.30 $22.877.793.393.67 $12.989.13 40 $32.526.043.52 $16.11 $28.61 $33.877.588.57 $33.52 $16.471.75 $33.61 $33.31 $33.61 $33.405.405.02 $33.36 $32.676.872.877.78 $13.941.61 $33.830.61 $33.833.881.881.08 $23.78 $13.67 $12.31 $33.759.53 $31.61 $33.26 $25.08 $23.759.669.104.969.58 80 $33.99 $9.043.78 $13.877.104.08 $33.526.35 $33.877.94 $7 200 $33.61 $33.020.862.053.50 $27.61 $33.94 $5 200 $33.41 $18.716.14 $27.596.35 $33.44 $33.58 80 $33.877.61 $33.424.58 80 $33.65 $15.877.56 $32.877.309.716.877.471.877.492.66 $19.35 $25.759.02 $33.08 $23.61 $33.57 $33.61 $33.872.877.862.94 $33.833.11 $28.56 $32.826.75 $33.881.57 $33.61 $33.877.63 $30.97 $33.61 $33.020.471.863.30 $22.793.039.862.11 sales price = $13.08 $33.65 $15.61 $33.40 $33.58 80 $33.864.588.46 $26.13 $33.860.99 $20.94 $4 200 $33.877.393.298.78 $13.877.94 $3 200 $33.863.863.11 $28.46 $26.053.97 29 .860.862.61 $33.877.053.267.863.16 $30.31 $33.833.46 $26.27 $29.61 $33.526.877.877.969.877.877.35 $33.03 $6.877.676.61 $33.802.11 $33.877.881.405.58 $21.860.61 $33.877.00 Percent Demand Supplied from Overseas 70% 60% 50% 40% 30% 20% 10% 0% $33.61 $33.862.26 $25.759.864.874.27 $29.989.02 $33.826.863.877.863.989.863.61 $33.826.13 $33.35 $25.492.40 120 $33.874.393.99 $20.588.30 $22.755.44 $33.104.41 $18.40 120 $33.874.08 $33.919.61 $33.053.877.877.14 $27.951.40 $33.043.393.862.65 $15.874.877.30 $22.94 $6 200 $33.877.881.66 $19.36 $32.969.44 $33.03 $6.793.588.61 $33.492.802.492.61 $33.862.35 $33.039.78 $13.94 $33.66 $19.863.877.989.40 120 $33.61 $33.969.862.877.11 $28.61 $33.919.11 $28.61 $33.039.02 $33.53 $31.393.52 $16.94 80% $33.58 $21.11 $33.

48 18244.87 5111.26 14420.11 90% 25499.82 20790.99 22138.84 17862.79 4014.09 10801.08 13765.99 17379.54 22266.20 19842.33 15533.10 24441.87 11002.22 10797.81 160 18741.60 19694.96 80 16186.04 15101.21 12596.21 17364.96 13435.67 2201.66 120 23980.79 4289.38 16074.85 13619.58 1978.Table 17: TOTAL ANNUAL PROFIT Overseas Local unit price Capacity 100% $2 200 26584.93 11840.54 18437.54 12080.73 16822.41 120 26594.75 13779.70 13973.63 18164.44 23354.45 20821.63 80% 24433.71 80 18800.56 $7 200 13510.61 15797.31 18262.14 17863.56 11311.27 16254.56 18439.74 21524.85 22515.86 16963.57 2513.37 17959.56 3049.75 15207.40 12793.13 4110.39 30 .97 15980.13 3317.44 19692.40 14155.76 20% 17941.94 15773.55 15001.66 17564.76 16673.43 16590.70 22847.58 9422.39 18551.68 -2145.99 14627.55 19042.80 15842.77 8878.26 7211.26 18949.96 8261.05 14383.53 17265.46 20089.92 6547.80 10253.37 11869.91 14426.13 15935.15 7281.45 6530.72 15536.89 22224.79 12959.85 19881.58 6829.97 22271.54 160 21355.58 40 13007.02 21523.19 15612.48 13901.68 12899.53 19859.07 17416.93 $4 200 21354.19 21019.29 10442.02 16513.99 7638.72 16072.66 21524.53 4120.44 10977.51 6497.26 8428.18 8736.37 15957.37 25525.15 12067.82 5116.41 -2122.95 10% 16854.80 4565.37 8606.55 8428.38 16033.13 5695.99 16089.41 14342.27 17492.92 16085.91 23173.83 17744.43 10496.31 12370.27 0% 15617.92 25502.44 23149.63 17995.64 22347.21 -2191.95 80 26641.66 9311.95 15916.96 19088.54 17024.29 17818.69 18573.56 16065.36 16594.83 5391.62 17458.87 6580.25 10007.21 14205.40 14167.48 -2215.68 120 13521.91 120 21365.71 15649.29 20249.63 17346.94 1015.05 14870.18 10782.66 21167.70 19191.12 13887.29 15024.99 9694.16 16567.20 20792.07 160 16126.01 16955.12 23143.83 13893.92 20656.73 19570.02 160 26585.43 22349.26 16031.62 19569.59 13640.45 80 21413.88 23354.81 7362.42 120 16135.48 14525.68 19057.54 16117.57 15999.35 6296.74 -2238.08 20696.06 24541.77 18010.09 9494.56 15869.09 19133.97 11544.51 11039.12 2242.79 6878.54 20702.59 14686.66 10989.45 737.70 40 20841.13 6488.21 80 24027.57 13350.42 18157.64 16891.74 20258.14 14724.87 17655.17 17558.12 40 26064.82 4840.23 13708.29 160 23970.90 15887.78 14425.77 10263.43 15607.23 15995.00 18469.59 1442.97 -96.37 $3 200 23969.00 40 18230.69 18164.09 12109.16 22341.96 20795.39 6564.10 18069.22 2159.95 15918.72 15809.33 160 13511.95 2180.40 25497.34 16035.74 13980.72 15989.96 13730.48 -374.94 11290.39 2221.36 19030.18 9150.08 11014.13 4903.10 8186.17 16090.55 16061.42 40 23452.52 13735.83 Percent Demand Supplied from Overseas 70% 60% 50% 40% 30% 23353.62 19127.56 6161.02 $6 200 16125.62 24439.24 20786.26 17243.03 15249.68 19113.36 10361.68 14201.94 -2168.69 13982.21 14650.13 22192.27 13732.48 18442.01 21189.29 13082.47 17864.96 459.17 12267.01 15951.30 11027.22 16366.25 16083.62 14202.97 8334.67 15601.84 16297.47 $5 200 18739.03 7895.18 20049.91 15596.51 12591.84 2263.06 14093.77 11587.56 19221.66 20255.46 181.37 15317.99 20428.06 18166.93 20875.25 15213.15 15591.49 16325.02 12813.90 19694.70 16949.11 9218.27 12853.85 23146.13 5763.86 14851.17 120 18750.90 9448.80 24228.55 3584.13 18341.29 40 15618.33 15143.21 80 13572.98 6513.98 17520.40 14936.59 20104.78 15902.08 13417.04 13639.

09 0.96 0.60 0.30 0.93 0.34 0.88 0.91 0.30 30% 0.64 0.92 0.12 0.47 0.60 0.84 $5 200 0.88 0.23 0.93 0.86 0.95 0.93 0.93 0.28 0.30 0.90 0.93 0.28 0.82 80% 0.73 0.88 0.90 0.90 0.91 0.22 0.89 0.88 120 0.18 0.92 0.64 0.91 0.92 0.41 0.12 0.41 0.90 0.85 0.88 0.92 0.89 0.91 0.90 0.96 0.88 160 0.84 0.18 0.88 0.82 0.40 0.73 0.89 0.92 0.74 0.90 0.74 0.12 0.28 0.88 0.91 0.92 0.45 0.92 0.88 0.87 40 0.73 0.60 0.12 0.92 0.90 0.15 0.84 90% 0.40 0.88 0.40 0.76 Percent Demand Supplied from Overseas 70% 60% 50% 40% 0.91 0.89 0.54 0.85 0.58 0.37 0.88 0.95 0.96 0.51 0.90 0.09 0.18 0.37 0.89 0.34 0.91 0.84 $7 200 0.89 0.18 0.54 0.47 0.51 0.87 40 0.88 0.90 0.09 0.23 0.84 $4 200 0.51 0.60 0.88 0.85 0.92 0.93 0.22 0.91 0.23 0.34 0.88 80 0.87 40 0.86 0.74 0.09 31 .88 160 0.37 0.82 0.92 0.88 160 0.82 0.40 0.45 0.74 0.74 0.51 0.74 0.22 0.89 0.56 0.56 0.45 0.30 0.86 0.88 0.95 0.45 0.84 $6 200 0.88 0.54 0.88 120 0.22 0.84 0.86 0.58 0.87 40 0.95 0.84 0.09 0.97 0.88 80 0.88 0.23 0.92 0.86 0.85 0.90 0.91 0.74 0.88 160 0.76 0.91 0.74 0.22 20% 0.91 0.88 120 0.92 0.88 160 0.90 0.56 0.76 0.96 0.96 0.15 0.64 0.28 0.12 0% 0.88 160 0.28 0.87 40 0.88 0.86 0.97 0.41 0.88 80 0.23 0.88 120 0.89 0.93 0.88 80 0.86 0.23 0.64 0.88 0.93 0.89 0.97 0.92 0.73 0.74 0.86 0.76 0.89 0.18 0.41 0.64 0.95 0.91 0.92 0.91 0.88 0.88 80 0.58 0.40 0.56 0.41 0.37 0.88 0.40 0.91 0.37 0.89 0.91 0.85 0.58 0.92 0.82 0.90 0.60 0.34 0.89 0.Table 18: DEMAND FILL RATE Overseas Local unit price Capacity 100% $2 200 0.92 0.60 0.97 0.30 0.89 0.88 0.22 0.47 0.95 0.91 0.73 0.41 0.86 0.93 0.89 0.96 0.90 0.93 0.45 0.54 0.15 0.88 0.84 0.47 0.54 0.58 0.89 0.15 0.82 0.89 0.58 0.86 0.93 0.73 0.89 0.86 0.12 0.88 120 0.28 0.97 0.97 0.45 0.18 0.47 0.51 0.84 0.74 0.54 0.88 0.91 0.87 40 0.86 0.76 0.91 0.84 $3 200 0.84 0.37 0.91 0.88 0.47 0.92 0.88 80 0.56 0.34 0.91 0.30 0.91 0.85 0.15 10% 0.91 0.56 0.88 120 0.51 0.91 0.74 0.15 0.86 0.74 0.09 0.64 0.92 0.91 0.76 0.34 0.93 0.89 0.

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