Nguyen Duy Tung
4453554
Group B
Tutorial 5

1. Discuss the trade-off between locating manufacturing operations in countries with relatively low wages versus manufacturing in relatively high-wage countries like Singapore or Australia. * The relative wage lies between the ratio of the productivities in each industry. * The domestic country is 6/1 = 6 times as productive in cheese production, but only 3/2 = 1.5 times as productive in wine production. * The domestic country has a wage rate 3 times as high as that in the foreign country. * These relationships imply that both countries have a cost advantage in production. * The cost of high wages can be offset by high productivity. * The cost of low productivity can be offset by low wages. * Because foreign workers have a wage that is only 1/3 the wage of domestic workers, they are able to attain a cost advantage (in wine production), despite low productivity. * Because domestic workers have a productivity that is 6 times that of foreign workers (in cheese production), they are able to attain a cost advantage, despite high wages.

2. In terms of warehousing design, give examples of trade-offs involving space, labour, and the use of automation. Why is it important to undestand these trade-offs? * One key to effective design of warehouse processes is the relative dominance between picking and storage activities because these two warehousing functions typically have opposing requirements. Techniques that maximize space utilization tend to complicate picking and render it inefficient while large storage areas increase travel distances which reduces picking efficiency. Ideal picking requires small stocks in dedicated, close locations * Automation of picking, storage, handling and information can compensate for these opposing requirements to a degree. However, automation is expensive to