Case 11.1 Let there be light lamp shade company. Answer the 7 questions at the e
ID: 353807 • Letter: C
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
Style A shades
The total number of shades per carton = 1
Volume of carton with style A shades= 1*1*1 feet3
The length of intermodal container = 40 feet
The width of intermodal container = 8 feet
The height of intermodal container = 8.5 feet
Volume of intermodal container = 8*8.5*40 feet3
Thus the number of style A shades that we can load in the container = 40*8*8 = 2560 (as 0.5 feet height would not be sufficient to load another set of boxes)
Weight of 1 carton with style A shades = 10pounds
Weight of 2560 cartons with style A shades = 25600 pounds
As this is within the transportation limit, we can load 2560 style A shades in the container.
Ans 2)
Style B shades
The total number of shades per carton = 6
Volume of carton with style B shades= 1*1*3.33 feet3
Thus the number of style B shades that we can load in the container = 12*8*8 = 768 (as 0.5 feet height and 0.01 of length would not be sufficient to load another set of boxes)
Weight of 1 carton with style B shades = 62 pounds
Weight of 768 cartons with style B shades = 47616 pounds
As this is not within the transportation limit, we would have to remove boxes equal to (47616 - 44000)/62 = 58.32
Thus we would have to remove 59 boxes to stay within permissible limits. Thus the total number of boxes that tha container can carry would be 768-59 = 709
Ans 3)
Style C shades
The total number of shades per carton = 10
Volume of carton with style C shades= 1*1*4 feet3
Thus the number of style C shades that we can load in the container = 10*8*8 = 640 (as 0.5 feet height would not be sufficient to load another set of boxes)
Weight of 1 carton with style C shades = 101 pounds
Weight of 640 cartons with style C shades = 64640 pounds
As this is not within the transportation limit, we would have to remove boxes equal to (64640 - 44000)/101 = 204.35
Thus we would have to remove 205 boxes to stay within permissible limits. Thus the total number of boxes that tha container can carry would be 640-205 = 435
Ans 4)
As we need to deliver 8100 identical lamps and we can deliver 2560 style A lamps per container, we would need 4 containers to deliver the total assignment.
Transportation cost to Vancouver per 40-foot container = $1400
As there are 4 containers, the total transportation cost to Vancouver = 4*1400 = $5600
Transportation cost from the Port Vancouver to the Port of Shanghai per 40-foot container = $800
As there are 4 containers, the total transportation cost from the Port Vancouver to the Port of Shanghai = 4*800 = $3200
Total Value of the shipment with style A shades at the Vancouver port = (Total value of the style A shades per container + Total value of the cartons per container + transportation cost to vancouver port per container)* Number of containers
= (4*2560 + 0.60 * 2560 + 1400) * 4
=$52704
Insurance costs for style A shipments = 2% of Total Value of the shipment with style A shades at the Vancouver port
=0.02* 52704
=$1054.08
Total costs of delivering the Style A shades to the Port of Shanghai = total transportation cost to Vancouver + the total transportation cost from the Port Vancouver to the Port of Shanghai + Insurance costs for style A shipments
= 5600 + 3200 + 1054.08 = $ 9854.08
Ans 5)
As we need to deliver 8100 identical lamps and we can deliver 709 style B lamps per container, we would need 12 containers to deliver the total assignment.
Transportation cost to Vancouver per 40-foot container = $1400
As there are 12 containers, the total transportation cost to Vancouver = 12*1400 = $16800
Transportation cost from the Port Vancouver to the Port of Shanghai per 40-foot container = $800
As there are 12 containers, the total transportation cost from the Port Vancouver to the Port of Shanghai = 12*800 = $9600
Total Value of the shipment with style B shades at the Vancouver port = (Total value of the style B shades per container + Total value of the cartons per container + transportation cost to vancouver port per container)* Number of containers
= (4.5 *6*709 + 2 * 709 + 1400) * 12
=$263532
Insurance costs for style B shipments = 2% of Total Value of the shipment with style B shades at the Vancouver port
=0.02* 263532
=$5270.64
Total costs of delivering the Style B shades to the Port of Shanghai = total transportation cost to Vancouver + the total transportation cost from the Port Vancouver to the Port of Shanghai + Insurance costs for style B shipments
= 16800 + 9600 + 5270.64 = $ 31670.64
Ans 6)
As we need to deliver 8100 identical lamps and we can deliver 435 style C lamps per container, we would need 19 containers to deliver the total assignment.
Transportation cost to Vancouver per 40-foot container = $1400
As there are 19 containers, the total transportation cost to Vancouver = 19*1400 = $26600
Transportation cost from the Port Vancouver to the Port of Shanghai per 40-foot container = $800
As there are 19 containers, the total transportation cost from the Port Vancouver to the Port of Shanghai = 19*800 = $15200
Total Value of the shipment with style C shades at the Vancouver port = (Total value of the style C shades per container + Total value of the cartons per container + transportation cost to vancouver port per container)* Number of containers
= (5*10*435 + 2.25 * 435 + 1400) * 19
=$458446.25
Insurance costs for style C shipments = 2% of Total Value of the shipment with style C shades at the Vancouver port
=0.02* 458446.25
=$9168.925
Total costs of delivering the Style C shades to the Port of Shanghai = total transportation cost to Vancouver + the total transportation cost from the Port Vancouver to the Port of Shanghai + Insurance costs for style C shipments
= 26600 + 15200 + 9168.925 = $ 50968.925
Ans 7 ) Total cost for the company for style A shades = Cost of lamps and cartons + Cost of delivery
= 4*8100 + 0.60*8100 + 9854.08
= $47114.08
Total cost for the company for style B shades = Cost of lamps and cartons + Cost of delivery
= 4.5*8100 + 2*12*709 + 31670.64
= $85136.64
Total cost for the company for style C shades = Cost of lamps and cartons + Cost of delivery
= 5*8100 + 2.25*19*435 + 50968.925
= $110065.175
From the total costs that are incurred by the company it would be advisable to opt for style A shades.
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