Fuyao Glass Case Study
CHALLENGE
After a substantial investment in a new factory in Ohio, Fuyao Glass needs to decide to fulfill contracted orders for the next five years from a factory in China or the new factory.
STRATEGY
Applying a learning curve to the factory in Ohio and factoring in several external factors, I, along with two colleagues from the MGMT 540 class at Duquesne University, determined the unit cost for the factory in China and the factory in Ohio.
RESULTS
Despite higher costs in almost every category outside of packaging and shipping, at least initially, after applying the effect of the learning curve in the Ohio factory and factoring in several external factors, including rising costs in China, the gap in cost per unit closes quickly. Considering the risk of a late order due to shipping issues from China, bringing about either financial implications imposed by the purchasing company or paying for expensive air freight, manufacturing in the Ohio plant costs less in the long run.
Jacob Betzner 