Some countries impose “local content rules” on products manufactured in their country to try to stimulate the use of local suppliers and presumably to help the local economy. Global Industries, Inc., produces in a country imposing a local content rule stating that 60% of the value of all purchases must be procured from local suppliers. The firm wishes to minimize purchasing costs while satisfying the local content requirement. Demand for the final product is 1,000 units. For each of its five components, Global Industries has identified the cheapest local supplier and cheapest supplier from outside the country. Assume that the quality level between competing suppliers is similar so that price is the only meaningful difference. The following table provides the purchasing cost for each component, along with the amount of each component used in each final product (e.g., a car would have 4 tires). Determine the least-cost purchasing plan. Does it match your intuition?

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Component Cost Per Unit from Cost Per Unit from Number of Components Used In Each Final Product Local Supplier Overseas Supplier A $0.30 $0.25 20 B 4.00 2.20 2 6.20 5.30 4 D 95.00 80.00 1 E 52.00 45.50 1