Chinese supplier base

A new type of intumescent additive is expandable graphite. This material has already found uses as a special effect pigment due to its metallic sheen and grey-black colour. Nord-Min has been developed by suppliers Nordmann Rassmann with flame retarding of plastics in mind. It is a halogen-free fire barrier additive from Chinese sources, based on natural graphite flakes with... 

What do you think about the hybrid approach Is it worth paying the local supplier extra to use it as part of a hybrid strategy For the hybrid approach, assume that management will order a base load of 900 units from the Chinese supplier for each of the two periods, making up any shortfall in each period at the local supplier. Evaluate the NPV of expected profits for the hybrid option assuming a discount factor of A = 0.1 per period. 

Tomas Koch of McKinsey uses the specialty chemical market as an example Chinese producers increasingly supply the multinational companies that are moving plants [into China] and then dropping their traditional suppliers. They switch almost as soon as an adequate local source becomes available... Since rising imports to meet growing domestic demand will eventually draw Chinese entrepreneurs with low cost bases into the market for just about all chemicals, any decision to serve the country from faraway plants may be risky. ... 

---