1. Assume you are Vanderpool. Draft the comparison Pon just requested.
2. Which of the two routing alternatives would you recommend? Why?
3. Assume that the buyer in Saudi Arabia has made other large purchases in the United States and is considering consolidating all of its purchases and loading them onto one large ship, which the buyer will charter. The buyer contacts HDT and, although acknowledging its commitment to buy FAS Doha, asks how much HDT would subtract from the $172,000 per truck price if the selling terms were changed to FOB HDT’s Crown Point plant. How much of a cost reduction do you think HDT should offer the buyer? Under what terms and conditions?
4. Answer Question 3 with regard to changing the terms of sale to delivery at port in Baltimore. The buyer would unload the trucks from the railcars.
5. Is there an interest rate that would make HDT change from one routing to another? If so, what is it?
6. Assume that it is the year 2005 and the cost to HDT of borrowing money is 12% per year. Because the buyer will pay for trucks as they are delivered, would it be advantageous for HDT to pay overtime to speed up production, ship the trucks as they were finished via the Port of Baltimore, and collect their payment earlier? Why or why not?