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21 December, 09:01

Evaluate the current China/Taiwan logistics costs. Assume a current total volume of 190,000 CBM and that 89 percent is shipped direct from the supplier plants in containers. Use the data from the case and assume that the supplier-loaded containers are 85 percent full. Assume that consolidation centers are run at each of the four port locations. The consolidation centers use only 40-foot containers and fill them to 96 percent capacity. Assume that it costs $480 to ship a 20-foot container and $600 to ship a 40-foot container. What is the total cost to get the containers to the United States? Do not include U. S. port costs in this part of the analysis.

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  1. 21 December, 09:12
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    The total cost involved in shipping the containers to country U. S is $2,594,930

    Explanation:

    Consider the following information regarding Company WWG:

    Total Current volume (CBM) = 190,000

    Direct shipping percentage = 0.89

    Direct ship Volume (CBM) = 169,100

    Consolidation center volume = 190,000 - 169,100 = 20,900

    Calculate the shipping cost of the company as shown below:

    Shipping Cost calculations

    Direct ship by Container type (in Feet) 20 40

    Volume (%) 0.21 0.79

    Volume (CBM) 169,100*0.21 169,100*0.79

    = 35,511 = 133,589

    Container capacity used 85% 85%

    Container center by container type

    Volume (%) = 100

    Volume (CBM) = 20,900

    Container capacity used = 96%

    Container capacity (CBM) (34)

    Container shipped = 35,511 / (34*0.85) = 1,229

    Shipping Cost per container = $480

    Shipping Cost by container size ($) = 1,229*480 4589,920

    Container capacity (CBM) (67)

    Container shipped = 133,589 / (0.85*67) + 20,900 / (0.96*67) = 2,671

    Shipping Cost per container = $600

    Shipping Cost by container size ($) = 2,671*600 = $1,602,600

    Calculate the total shipping cost as shown below:

    Total shipping cost = $589,920+$1,602,600 = $2,192,520

    Calculate the consolidation center operating cost as shown below:

    Number of centers = 4

    Annual fixed cost per center = $75,000

    Total annual fixed cost = $75,000*4 = $300,000

    Variable cost per CBM = $4.9

    Total annual variable cost = 20,900*$4.9 = $102,410

    Total annual consolidation center costs = $300,000+$102,410 = $402,410

    Calculate the total cost involved in shipping containers to the Country U as shown below:

    Total Cost = Total Shipping Cost + Total Annual Consolidation center Cost

    = $2,192,520 + $402,410

    = $2,594,930

    Hence, the total cost involved in shipping the containers to country U. S is $2,594,930.
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