02 Oct Read, evaluate and respond in no less than 150 words in two peer responses
42558Read, evaluate and respond in no less than 150 words in two peer responses:
Peer 1:
It really depends on what you are manufacturing. A cheaper wage rate may not compensate the high shipping customs costs you must pay to send your product to the area where demand is high. Also, low wage workers may be much less productive. Finally, there may be government regulations that counter this advantage. However, very often wage rates do determine the location, which is why you see so many factories opening in developing countries. Also, there are many factors to consider, such as security availability of qualified employees presence of target market rental or lease price of office space or store. According to the 2011 Minnesota Minimum Wage Report, about 50 percent of those receiving minimum wage work in restaurants, meaning that most of them receive tips in addition to their minimum wages. About 60 percent of those earning the minimum wage were younger than 24 years old, 70 percent worked part-time, and 30 percent didn’t even have a high school diploma, meaning that most of them were still their parents’ dependents and the income was supplementary. Of the 40 percent minimum-wage earners older than 24, quite a few are retirees working to feel better and supplement their pensions. And of course, most deserving people are eventually promoted and start earning more
Peer 2:
Two major factors that help a company choose a location to set up shop are wage rates and productivity. Consequently, even though starting in an area with low wage rates is a plus, it can still hinder business if productivity levels are low. The text highlights the importance of both productivity and wage rates. According to (Heizer, Render, & Munson, 2017) “For example, if Otis Elevator pays $70 per day with 60 units produced per day in South Carolina, it will spend less on labor than at a Mexican plant that pays $25 per day with production of 20 units per day.” This can easily be calculated by taking the cost and dividing it by the amount of production. Thus, this displays the importance of production even if it seems more expensive. Crucial issues to consider when hiring labor include quality of training, education, and work habits. Subsequently, those important qualities will generally be worse if wages are lower. It is applicable to the old saying you pay for what you get. Aside from wage rates and productivity other costs include materials, utilities, taxes, and transportation just to name a few. Those costs are quantified which makes them tangible. Conversely, hard to measure aspects like quality of education and attitude of workers are intangible costs. These factors along with political risks, proximity to markets, suppliers, and competitors all play a key role in a company’s success.
References
Heizer, J., Render, B., & Munson, C. (2017). Principles of Operations Management Tenth Edition. Retrieved from https://etext.pearson.com/eplayer/book/BAID3DO016V/page
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