Discuss the below:
Q: Recently Abercrombie & Fitch (A&F) began shifting a large portion of its Asian deliveries to the U.S. from air freight to slower, but cheaper ocean freight. Shipping costs have been cut dramatically, but shipment times have gone from days to weeks. In addition to having less control over costs have been cut inventory and being less responsive fashion changes, the holding costs have risen for the goods in transport. Meanwhile, Central America might offer inexpensive manufacturing alternative that might reduce shipping time through the Panama Canal to, say, 8 days, compared to, say, 26 days Asia. Suppose that A&F uses an annual holding rate 31%. Suppose further that the product costs exist21 to produce in Asia. Assuming that the ocean linear approximately the same whether coming from Asia or Central America, what would the maximum production cost in Central America need to be in order for that to be a competitive source compared to the Asian producer? The maximum production cost in Central America should be exist