Materials to make the company’s footwear are purchased from a variety of suppliers, all of whom have the
capability to make daily deliveries to the company’s plants; the company’s just-in-time supply chain
eliminates the need for maintaining materials inventories at its plants. Newly produced footwear is
immediately shipped in bulk containers to one of the company’s four regional distribution centers. The
distribution center for Europe-Africa is in Milan, Italy. The distribution center for the Asia-Pacific region is in
Bangkok, Thailand. The Latin American distribution center is in Rio de Janeiro, Brazil, and the North
American distribution center is in Memphis, Tennessee. Many countries have import duties on footwear
produced at plants outside their geographic region; import tariffs, which become payable when your
company ships footwear to foreign distribution centers, currently average $4 per pair in Europe-Africa, $6
per pair in Latin America, and $8 in Asia-Pacific. However, the Free Trade Treaty of the Americas allows
tariff-free movement of footwear between all the countries of North America and Latin America. The
countries of North America, which strongly support free trade policies worldwide, currently have no import
tariffs on footwear made in either Europe-Africa or Asia-Pacific. Your instructor has the option to alter
tariffs as the game progresses, so the current tariff arrangements should be viewed as temporary.