Question

Evaluate the current China/Taiwan logistics costs. Assume a current total 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 use only 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.

Answer 1

The total cost involved in shipping the containers to country U.S is $2,594,930

Step-by-step explanation:

Consider the following information regarding Company WWG:

Total Current volume (CBM) = 190,000

Direct shipping percentage = 0.89

Direct ship Volume (CBM) = 169,100

Consolidation center volume = 190,000 - 169,100 = 20,900

Calculate the shipping cost of the company as shown below:

Shipping Cost calculations

Direct ship by Container type (in Feet) 20 40

Volume (%) 0.21 0.79

Volume (CBM) 169,100*0.21 169,100*0.79

= 35,511 =133,589

Container capacity used 85% 85%

Container center by container type

Volume (%) = 100

Volume (CBM) = 20,900

Container capacity used = 96%

Container capacity (CBM) (34)

Container shipped = 35,511/ (34*0.85) =1,229

Shipping Cost per container = $480

Shipping Cost by container size ($) = 1,229*480 4589,920

Container capacity (CBM) (67)

Container shipped = 133,589/ (0.85*67) + 20,900/ (0.96*67) = 2,671

Shipping Cost per container = $600

Shipping Cost by container size ($) = 2,671*600 = $1,602,600

Calculate the total shipping cost as shown below:

Total shipping cost = $589,920+$1,602,600 = $2,192,520

Calculate the consolidation center operating cost as shown below:

Number of centers = 4

Annual fixed cost per center = $75,000

Total annual fixed cost = $75,000*4 =$300,000

Variable cost per CBM = $4.9

Total annual variable cost = 20,900*$4.9 = $102,410

Total annual consolidation center costs = $300,000+$102,410= $402,410

Calculate the total cost involved in shipping containers to the Country U as shown below:

Total Cost = Total Shipping Cost + Total Annual Consolidation center Cost

= $2,192,520 + $402,410

= $2,594,930

Hence, the total cost involved in shipping the containers to country U.S is $2,594,930.