To determine: The effect of offshoring on the economy of Country U.
Introduction:
The profit leverage effect would reduce the inventory cost which would improve the profit of the firm. When the purchase cost reduces, the profit and sales would increase equally.
Explanation of Solution
Determine the effects of offshoring on the economy of Country U:
The effect of offshoring has both advantages and disadvantages on the economy of Country U. The products that are produced offshore and important would have lower prices than the products that are produced in-home. The major advantage of offshoring to the people of Country U is that the people can spend more money on other goods and services.
The disadvantage of offshoring is that the people who are involved in producing the products inside the country will lose their jobs due to offshoring. This will lead to
The economic theory of fair trade such as foreign government would constrain free trade and foreign government uses money manipulation that are not conformed to reality.
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Chapter 17 Solutions
OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
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