solution

International trade may offer lower unit prices but at a higher risk. Consider the total cost and trade off lower production costs with higher priced transportation and more uncertain delivery schedules. Add in disruptive weather patterns, multi-language requirements, and fluctuating exchange rates; not to mention political turmoil, labor disputes, and unique tariffs and duties.

Your analysis will determine if it is worth it. Throughout the world there are only two sources of Schachtel Schmuggel Bannware:

• CousinsAg, a domestic supplier located in Wahoo, Nebraska
• Dong Hai Supply, an international supplier located in Chengdu, China

Throughout this turnaround, we will ship utilizing Twenty-foot Equivalent Units (TEUs) from each location. Assume the following for all questions:

• Projected Annual Demand is 21,500 units
• There are 365 days in a year
• All product will be shipped to a distribution center in Alliance Fort Worth (AFW) where we will service our customer’s needs
• Inventory carrying cost is 32.2%
• A TEU container can hold up to 600 units of our product.
• The average labor rate in Chengdu is 10.36 Yuan per hour. The average labor rate in Wahoo, Nebraska is $25.30 per hour.
• Today’s exchange rate is 1 CNY China Yuan Renminbi = 0.14646 US Dollar
• The Harris EOQ formula is Q* = SQRT((2*Annual Demand*Ordering Cost)/(Inventory Carrying Cost*Unit Price))
• Our goal is to maintain a 97.7% service level.
• We have a deviation in daily sales of 11 units.
• We cannot buy or hold fractional units of a product

Using today’s exchange rate, what is the INITIAL PURCHASE COST PER UNIT (in US Dollars) paid to Dong Hai Supply? (Do not include transportation costs)

Group of answer choices

Between $80.01 and $80.20

Between $80.21 and $80.40

Between $547.00 and $548.00

Between $12,400.00 and $12,500.00

Between $1,800.00 and $1,820.00

Between $80.41 and $80.60