1.

With respect to the natural resources needed to make wickable shirts, is Patna or
Lucknow the preferred location? Why?
2. With respect to transportation considerations, is Patna or Lucknow the preferred
location? Why?
3. With respect to labor characteristics, is Patna or Lucknow the preferred location? Why?
4. With respect to quality-of-life considerations, is Patna or Lucknow the preferred
location? Why?
5. Should AILS recommend that the manufacturing plant be located in Patna or Lucknow?
Why?
6. Would you answer to Question 5 change if the shirts are exported through the Port of
Kolkata? Why or why not?
7. Suppose that AAA decides to near-source production to Latin America. Keeping in mind
the key stipulation presented in the case, where might AAA locate its production plant in
Latin America? Why?
SOLUTION
1.

It does not appear that either Patna or Lucknow has an advantage with respect to the
natural resources needed to make wickable shirts.

2.

As of late 2013, a highway trip between Lucknow and Mumbai is estimated to take
22 hours, while a highway trip between Patna and Mumbai is estimated to take 28
hours. In addition, Lucknow appears to offer superior rail service to Mumbai in
comparison to Patna. Although both cities offer air service to Mumbai, Lucknow
provides non-stop air service to Mumbai, while Patnas service to Mumbai is via
connecting flights, generally through New Delhi. These data suggest that Lucknow
would be the preferred location.

3.

As of late 2013, the minimum wage for skilled labor in tailoring in Patna was 225
rupees per day, compared to 253 rupees per day in Lucknow. Moreover, Patna has

the highest unemployment rate in Indian cities with more than one million residents.
These data suggest that Patna would be the preferred location.
4.

As of late 2013, the cost of living is higher in Patna than Lucknow, largely because
of housing costs. Patna also has higher levels of reported crime than Lucknow
although criminal activity in Lucknow is increasing faster than in Patna in recent
years. Lucknow appears to offer better educational opportunities than Patna, in part
because more colleges and universities are located there. Indian census data also
indicate that the male / female ratio is more unbalanced in Patna than Lucknow,
which might indicate that Patna is less hospitable and inviting to females. This
information suggests that Lucknow would be the preferred location.

5.

Based on Questions 1 4, Lucknow appears to be preferable to Patna.

6.

The distance from Lucknow to Kolkata is approximately 615 miles and the
corresponding highway trip is estimated to take 14 hours. The distance from Patna
to Kolkata is approximately 360 miles and the corresponding highway trip is
estimated to take nine hours. Both Patna and Lucknow offer direct rail service to
Kolkata and both cities also offer non-stop flights to Kolkata. Moreover, both
Kolkata and Patna have fixed (as opposed to floating) terminals on Indias National
Waterway 1. Due to improved transportation metrics, Patna appears to be a viable
option for a manufacturing plant if the shirts are exported through the Port of
Kolkata.

7.

As of late 2013, there are approximately 35 Latin American cities that meet the
population stipulation presented in the case. Two of these, Juarez and Tijuana, are
Mexican cities located in close proximity to the United States. Juarez, located just
south of El Paso, Texas, provides four separate points of entry into the United States
and is centrally located relative to Tijuana, which is just south of San Diego,
California. It should be noted that Juarez has experienced high levels of crime and
violence in recent years.