A production process at Kenneth Day Manufacturing is shown in Figure S7.9. The drilling operation occurs separately from, and simultaneously with, the sawing and sanding operations. Sawing Sanding Assembly 6 units/hr 6 units/hr 0.7 units/hr Drilling 2.4 units/hr Welding Assembly 2 units/hr 0.7 units/hr Assembly 0.7 units/hr A product needs to go through only one of the three assembly operations (the operations are in parallel).
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In Cambodia, six laborers, each making the equivalent of $3 per day, can produce 40 units per day. In China, ten laborers, each making the equivalent of $2 per day, can produce 45 units. In Billings, Montana, two laborers, each making $60 per day, can make 100 units. Based on labor costs only, which location would be most economical to produce the item?