Case 11.1 Let there be light lamp shade company. Answer the 7 questions at the e

Question

Case 11.1 Let there be light lamp shade company. Answer the 7 questions at the end please and Thank you I am stuck

Located 60 miles from Chicago, Illinois, the let there be light lamp shade company, which designs and builds custom lamp shapes and lamp globes, historically derived all of its sales from customers in the United States and Canada. Recently, an architectural firm that often contracted with let there be llight was commisioned to design several large public buildings in the Peoples Republic of China. These buildings would require let there be light to supply 8,100 identical lights, and the relevant terms of sale would include delivery to the Port of Shanghai where the architectural firm would take possession. Let there be light designed a prototype cylindrical lamp shade that measured 11 inches high and ll inches in diameter and would be packed into cartons that measured 12 inches by 12 inches by 12 inches. We refer to these shades as Style A. The style A lamp shades would cost $4 each to manufacture and weighed nine pounds each; each carton cost 60 cents and weighed one pound, meaning that each loaded Style A carton weighed 10 pounds.

In effort to reduce packaging costs and also enhance the company's commitment to environmental logistics. Let there be light also developed two prototype lamp shades reffered to style B and Style C in the shape of a cone, rather than a cylinder. One advantage to conical shades is that they can be nested that is stacked inside each other, meaning that, unlike Style A, multiple lamp shades could be packed into a single carton. Morever, the nested shades would also help protect each other, although a slight bit of padding would be needed between the nested shades. The production costs for the conical lamp shades would be higher than those for the cylindrical shades.

Let there be light determined that each Style B lamp shade would cost $4.50 to manufacture and could be shipped nested, with six lamp shades per carton. The carton dimensions were 12 inches by 12 inches by 40 inches, and when holding six shades, a carton weighed 62 pounds. Each Style B carton cost $2.00, and this included padding between the shades. Each Style C lamp shade would cost $5 to make and could be shipped nested, with 10 lamp shades per carton. The carton dimensions were 12 inches by 12 inches by 48 inches and when holding 10 shades a carton weighed 101 pounds. Each carton cost $2.25, including padding between the individual shades.

The lamp shades would be loaded into intermodal containers and transported by rail to the port of Vancouver. The transportation cost to Vancouver was $1400 per 40-foot container, without regard to weight, although the total shipment weight could not exceed 44,000 pounds per container because of highway weight restrictions. The interior dimensions of the intermodal container were 8 feet wide by 8.5 feet high by 40 feet long. Insurance costs were 2 percent of value of the shipment ready to be loaded aboard ship in Vancouver (i.e. all of the company's costs up to this point). Let there be light learned that the transportation cost from the Port Vancouver to the Port of Shanghai were $800 for a 40-foot container.

Questions

1. How many Style A shades can be loaded into a 40-foot container?

2. How many Style B shades can be loaded into a 40-foot container?

3. How many Style C shades can be loaded into a 40-foot container?

4. What are the total costs of delivering the Style A shades to the Port of Shanghai?

5. What are the total costs of delivering the Style B shades to the Port of Shanghai?

6. What are the total costs of delivering the Style C shades to the Port of Shanghai?

7. Which style would you recommend? Why?

Explanation / Answer

Size of a 40 ft container = 40'x8'x8.5' = 1200x240x255

which can contain 12x12x12 containers 100x20x21 = 42000

1. The number of containers of A will be 42000.

Weight restrictions allow 44000 pounds, which allows 44000/10 pounds = 4400 containers

2.No. of B containers that can be accomodated ( size 12x12x40 each)

30x20x21 = 12600

However, the weight restrictions allow 44000 pounds that is 44000/62 =709 containers

3. No. of C containers that can be accomodated ( size 12x12x48)

25x20x21 =10500

However the distance restrictions allow 40000 pounds that is 44000/ 101 = 435 containers.

4. No. of containers needed for transporting 8100 lights, i.e.8100 cartons,

= 8100/4400 =2

Cost of transportation = Haulage cost + Insurance cost = 2x(1400+800) + 0.02x(4.6x8100) = 5145.2

Cost of manufacture = 4.6x8100 = 37260

Total cost = 5145.2+37260 = 42405.2

5. No. of containers needed to transport 8100/ 6 = 1350 cartons of B

1350/709 = 2

Cost of transportation = 2x ( 1400+800) +0.02x( 4.5x8100+2x 1350) = 5183

Cost of manufacture = 4.5x8100 + 1350 x2 =39150

Total cost = 44333

6. No. of containers needed to transport 8100/10 = 810 cartons of C

810/435 =2

Cost of transportation = 2x( 1400+800) + 0.02 ( 5x8100+2.25x810) = 5246.45

Cost of manufacture = ( 5x8100+2.25x810) = 42322.5

Total cost = 47568.95

7. Considering the three cost structures, A is the most appropriate option.

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