Chapter 11 CASE 11.1 Vibrant Video Vibrant Video (V\') is a manufacturer of home
ID: 2554306 • Letter: C
Question
Chapter 11 CASE 11.1 Vibrant Video Vibrant Video (V') is a manufacturer of home theater projection systems. The assembles Ultra HD projectors in Portland, Oregon and sells them online and thpany specialty electronics stores. The most popular model retails for $4,995 and va projector with high fidelity audio components that are purchased from external Due to ongoing delivery challenges with their Pacific Rim suppliers and car has decided to buy from suppliers in closer proximity to Portland. The speakers will supplied by an electronics company with operations in Tijuana, Mexico and the receivere will be purchased from an audio lab in Manchester, New Hampshire. The purchase contracts have been negotiated in principle. The speaker supplier has given V two shipping choices under FOB Destination, Freight Collect. The receiver supplier only sells its products FOB Origin, Freight Collect. The remaining issue for the V transporta tion director is to evaluate the delivery options that her analyst recommended for each product and make a decision. Relevant information is provided in the following table: SPEAKERS RECEIVER Manchester, New Hampshire $225 per unit 5 pounds 18 ()x8 (W) x 4" (H Compact, vibration sensitive, Manufactured in V purchase price $175 per set Weight Tijuana, Mexico 28 pounds 30 (L) x 18" (W) x 18 (H) Sturdy, bulky, not easily damaged Characteristics theft risk Freight Terms FOB Destination, Freight Collect FOB Origin, Freight Collect and Allowed Weekly LTL delivery 200 units $2,485 Cost per delivery Twice per month TL delivery 400 units $2,946 Cost per delivery Option 1 Weekly Ground delivery 200 units $2,169 Cost per delivery Twice per week airfreight delivery 100 units $2,411 Cost per delivery Option 2Explanation / Answer
2. Speakers
Option 1 cost per delivery / Units = 2485/200 = 12.425
Landed cost per unit = cost + delivery charges = 175+ 12.425 = 187.452
Option 2 cost per delivery / Units = 2946/400 = 7.365
Landed cost per unit = cost + delivery charges = 175+ 7.365 = 182.365
3. option 2 will be recommended because option 2 is cheaper than option 1 i.e. 182.36 Vs 187.45
4. Receivers
Option 1 cost per delivery / Units = 2169/200 = 10.845
Landed cost per unit = cost + delivery charges = 225+ 10.845 = 235.845
Option 2 cost per delivery / Units = 2411/100 = 24.11
Landed cost per unit = cost + delivery charges = 225+ 24.11 = 249.11
5. option 1 will be recommended because option 1 is cheaper than option 2 i.e. 235.845 Vs 249.11
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