There is a dramatic difference in labor costs on a per$-$hour basis, but the workers in Tacoma are slightly more productive $($they require $49$ minutes per bag instead of $63$ minutes$).$ Material costs do not differ between the two options because, in both cases, materials are procured in Turkey. It costs $$1$ per bag to send it from Turkey via ocean carrier, but the lead time is probably eight weeks when all of the steps are accounted for $($e$.$g$.,$ production, movement to the port, and actual shipping$).$ To get a faster lead time, it would require air shipments, but that is much more expensive at $$14$ per bag.

Of course, Figure $1$ doesn't tell the entire story. There would be costs associated with finding a good supplier and monitoring that supplier. And it isn't clear how Eddie Bauer's customers would react to the move$-$ from its start, Eddie Bauer emphasized with pride that it was made in Tacoma. Does moving production to Turkey eliminate part of the brand's cache with customers?

Questions:

What is the total cost of making a bag in Tacoma? What is the total cost of making a bag in Turkey, including the transportation cost of shipping the bag from Turkey to the United States?

Suppose Eddie Bauer does move production of wholesale bags to Turkey. Let's say it can place orders with its Turkish supplier every four weeks; that is$,$ one period equals four weeks. Its lead time is two periods; that is$,$ L $=2.$ The average demand for one type of wholesale bag is $200$ bags per period $($i$.$e$.,$ they sell, on average, $200$ bags every four weeks$),$ with a standard deviation of $100$ bags. The holding cost for each bag each period is $$1\mathrm{.}00,$ and it would operate with a $2\mathrm{.}5$ safety factor. How much inventory on average, would it have on order and on hand? What would be the inventory holding cost per bag?

Should it move the production of custom bags to Turkey? Should it move the production of wholesale bags to Turkey? Make an answer to these two questions, using both quantitative and qualitative reasoning$-$ as appropriate.