You are the purchasing manager for Primo Caf Inc., a small-sized manufacturer of stylish coffee makers based in Grand Rapids. The company has three distinct coffee makers that it produces: The Bean Boiler, the Family Man, and the Gaffissimp. The Family Man is Primo Caf's mid-market offering. For many years, Primo Caf manufactured most of the Family Man in-house and only bought the glass pot and the electronics that control the on/off function and the timer. However, cost pressures and growing opportunities in international markets changed the company's strategy over time. Indeed, over 60% of Family Man sales are now outside the US, primarily in the growing urban markets of India, China, and Taiwan. Today, all raw materials and component parts are sourced from a variety of suppliers around the globe. Final assembly has been subcontracted to HTC Company in Vietnam. HTC operates three manufacturing facilities in Phong Nam, Vietnam. The company was established two years ago as a fully owned subsidiary of a global investment group, PriypCe Finance Limited. HTC has a good reputation for producing quality consumer products and has completed contracts with major brands such as Bosch, Kitchen Aid, Maytag, and Armana. Since outsourcing to HTC, the total cost to manufacture the Family Man has dropped from $32 per unit to $12 per unit. A total cost analysis for the Family Man is provided below. Each unit is sold for $34.99. The Family Man's sleek, artistic design and range of unique colors helps to distinguish it from a wide selection of similar products offered by competitors. Prices for direct competitors range from $25 to 545 . Sales of the Family Man range from 19,400 to 20,600 units per month. Despite the increase in profits, there have been some concerns using HTC. Although the company has a good reputation for producing quality products to specification, transportation delays-particularly entry into the US at various West Coast ports - have caused problems with on-time deliveries for US customers. Also, there have been several reports recently by the Workers' Rights Action Committee that have alleged that international manufacturers working in Phong Nam employ children as young as six years old under grossly unsafe working conditions - although HTC has not been named specifically. Moreover, there has been a change in administration in the US. Concerns over international trade and the impact of offshoring on US manufacturing jobs was a central - and very heated - topic in the campaign. Most policy analysts are expecting the new administration of impose a series of tariffs and other protectionist policies aimed at discouraging companies from offshoring product manufacturing. Vietnam, in particular, has been a key target of this debate. Marco has asked you to review Primo Caf's strategy as it relates to the production and distribution of the Family Man. In particular, he wants your opinion on the following questions: Marco has asked you to review Primo Caf's strategy as it relates to the production and distribution of he Family Man. In particular, he wants your opinion on the following questions: 1. If the new US administration impnsed tariffs on Vietnam, what would the likely impact be for production costs related to the Family Man? And what would the likely impact be for Primo Caf's customers? 2. What are some strategies that Primo Caf could employ to help mitigate the impact of any new tariffs - without fully redesigning their supply chain? 3. If Primo were to take a more holistic look at redesigning its supply chain for the Family Man, what are some considerations that the company should take into consideration? Family Man Total Cost \begin{tabular}{cc} \hline Mafg Costs & $12.00 \\ Shipping Costs & \\ To LA & $0.75 \\ Customs & $0.24 \\ Duties & $0.66 \\ US Port Handling & $1.32 \\ \hline Trans Costs from LA & $1.20 \\ Warehouse Charges & \\ Pick \& Pack Charges & $1.00 \\ Quality Control & $0.50 \\ \hline Insurance & $2.00 \\ \hline Distribution to Customers & \\ uS & $3.54 \\ India & $5.98 \\ \hline China \\ Taivan & $6.70 \\ \hline \hline \end{tabular} Total Cost US $23.21 India $25.65 China $26.37 \begin{tabular}{l|l} Taivan & $25.41 \end{tabular}