Supply Chain Management Impact On Cost • Nursing Area

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Supply Chain Management Impact On Cost

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Acting on your recommendation that the retiring purchasing manager be replaced with a more of Global Supply Chain, the CEO hired a new one. The found herself facing an important decision of where to source some components that have traditionally been very high cost, when the factory makes them in-house. Here is the data she is presented with:

The currency of Country A is called Reds; of Country B is called Greens.
The currency and forecasted exchange rates are as follows:
- $1 = 2 Reds
- $1 = 2.2 Greens
The product costs for each of the 5 products from each of the2 countries are as follows:

	Country A	Country B
Product 1	10 Reds	9 Greens
Product 2	2 Reds	2.2 Greens
Product 3	7 Reds	4 Greens
Product 4	5 Reds	5 Greens
Product 5	4 Reds	4.5 Greens

Because of the different packaging available in the two countries, and the different skill levels in packaging, the parts per container are different between the two countries.
- From Country A, any of the 5 parts will fit 1,000 per container
- from Country B, any of the 5 parts will fit 800 per container
The ocean freight costs for a 40′ container of any of these products are as follows:
- For Country A, costs are similar to the ocean freight from Brisbane, Australia to the port of .
- for Country B, costs are similar to the ocean freight for a 40′ container from Tokyo, Japan to the port of New York City.
- Brisbane ocean costs = $5,536.84 and Tokyo ocean coasts = $4,426.84

Assignment:

Take Product 1 and then:

Perform the necessary research and calculations regarding the best source of that product based only on total delivered (landed) cost, which includes the following:

Product cost from each country, taking the exchange rate into account
per piece, showing the quotes received from the Web site (posted below), and taking the differing number of pieces per container into account

Make a recommendation on which country from which to source that product, and explain your reasoning why.

R A T I N G D E T A I L S

Ocean Container Rates fromNewYorkToBrisbane (Australia)

Total Volume Weight 20000 lb or 9071.94 kgs.

DESCRIPTION	VALUE	RATE	QTY.	AMOUNT
Freight	40′ Container	$2,903.00	1	$2,903.00
Bunker Adjustment Factor [BAF Charges]	40′ Container	$120.00	1	$120.00
Warfage	9.07 MT	$0.50		$4.54
Bill Of Lading				$50.00
Residential Pickup Charges				$75.00
Surcharge for Personal Effects (with or without Cars)				$250.00
Drayage to Loading Area (1 – 10 Miles)		$485.00	1	$485.00
Fuel Surcharge				$184.30
Insurance Charges ($500 Deductible) (Type Of Goods: Household Goods International Move (with or without Cars))	$100,000.00	1.5 %		$1,500.00
Shipper’s Declaration (Over $2,500.00)	$100,000.00			$50.00
Less: Online Allowance				$85.00
Total	US $5,536.84

R A T I N G D E T A I L S

Ocean Container Rates fromNewYorkToTokyo (Japan)

Total Volume Weight 20000 lb or 9071.94 kgs.

DESCRIPTION	VALUE	RATE	QTY.	AMOUNT
Freight	40′ Container	$1,868.00	1	$1,868.00
Bunker Adjustment Factor [BAF Charges]	40′ Container	$120.00	1	$120.00
Warfage	9.07 MT	$0.50		$4.54
Bill Of Lading				$50.00
Surcharge for Personal Effects (with or without Cars)				$250.00
Drayage to Loading Area (1 – 10 Miles)		$485.00	1	$485.00
Fuel Surcharge				$184.30
Insurance Charges ($500 Deductible) (Type Of Goods: Household Goods International Move (with or without Cars))	$100,000.00	1.5 %		$1,500.00
Shipper’s Declaration (Over $2,500.00)	$100,000.00			$50.00
Less: Online Allowance				$85.00
Total	US $4,426.84

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