solution

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 TRANSPORTATION AND CUSTOMS COST (in US Dollars) to ship a TEU container from Dong Hai Supply in Chengdu, China to the distribution center in Alliance Fort Worth (AFW)? [Make sure you include tarrifs and duties]

Group of answer choices

$325.00

$2,250.00

$4,393.23

$1,818.23

$4,068.23

$2,143.23