1. Evaluate the current China/Taiwan logistics costs. Assume a current volume of
ID: 410546 • Letter: 1
Question
1. Evaluate the current China/Taiwan logistics costs. Assume a current 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 only use 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.Explanation / Answer
From the current volume of 190,000 CBM, 89% i.e. 89% of 190,000=169,100 CBM will be shipped from the supplier plants. As the consignment volume is larger and so the cost so 40-foot container should be used for shipping. A 40-foot container can hold 67 CBM.
Supplier loaded 85% capacity of the container but the consoidation centers fill 96% capacity so it can fill 67*96%=64.32CBM per 40-foot containers.
Total numbers of container required=190,000/64.32=2954
Total cost= 2954*$600=$1,772,400
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