Problem Statement
The minimum ordering cost of custom designed shirts produced in the United States is three times the cost in India, making outsourcing a profitable alternative
Exploratory Research
United States manufacturers are forced to pay workers government regulated minimum wages. These wages, due to the high cost of living, add on to the manufacturing cost and are passed onto the consumer in the form of higher prices to produce a revenue that marks an acceptable profit. Offshore manufacturers, such as those in India, offer a lower manufacturing cost due, in part, to lower minimum wages, lower hiring cost, and a lower cost of manufacturing plants than the United States manufacturers.
It appears that the total production cost in India is lower than that in the United States. However, offshore manufacturers are placing minimums on an order to create larger revenue for their business despite a lower product quality than custom designed shirts produced in the United States.
An in-depth interview will be utilized to collect exploratory data in order to gain insight into how offshore manufacturing can benefit the fashion retail industry. The exploratory research dummy table (see Table 1) records the possible reasons for the high cost of custom designed shirts produced in the United States and in India.
Exploratory data analysis indicates that the ordering cost, based on the minimum order quantity, has a direct bearing on the low production cost of offshore manufacturers. Marketing, however, has to ensure high demand to offset the inventory cost that might result from the high minimum order quantities imposed by offshore manufacturers.
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Reason for high cost
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United States
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India
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Cost of living
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High due to
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Low due to
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Regulated wages
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High due to
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Low due to
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Cost of hiring
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High due to
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Production cost
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High in part due to fixed costs
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Fixed costs are low
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Minimum order quantity
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Low provided supplier agreement
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High due to lower production costs
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Cost of inventory
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Low due to lower order quantities
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High due to higher order quantities
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Descriptive Research ??
Preliminary Causal Research ??
Detailed Causal Research ??