After reviewing the demonstration video and looking over the slides, complete the following scenario questions and transfer your answers to the Week 8: Bonus Activity quiz in Canvas. Note that not every question on this worksheet will appear on the Canvas quiz. Be careful when transferring your answers. Case: Sound-Around Turntables Sound-Around Turntables (SATT) is a regional manufacturer of high-fidelity turntables. It has been in business in Traverse City, Michigan since 2018 and has steadily increased sales volume as U.S. sales of vinyl albums re-ignited. Robert Ritchie, CEO for SATT received an order for 12,500 turntables for Best Buy, a national electronics retailer. Production for this order will begin in late March and the customer order must be delivered on June 1. Since SATT builds to order, Ritchie needs to begin ordering parts from his global supply base soon. An important component is the turntable motor that is purchased from a global export company. Here are the two options that Richie is considering: Option 1: Park Electric Location: Busan, South Korea Background: Current supplier Option 2: Blanca Motor Location: Buenos Aires, Argentina Background: Potential new supplier The product is high quality and SATT has worked with Park for 3 years. However, the company recently raised its prices citing higher material costs and rising tariffs. The sample product is high quality, but SATT has never worked with Blanca. SATT likes the shorter supplier-to-factory distance and monthly deliveries. However, not much is known about this supplier or the political environment in Argentina Order release: Supplier (Park) will ship all units in the new order at one time on January 15. Order release: Supplier (Blanca) will make monthly deliveries of 2,500 units starting on December 1. Offer: Park Electric currently sells the 20W synchronous motor to SATT for 30,000 KRW per unit. Order cycle time is 47 days. Terms are listed as DAP, Port of Baltimore. Offer: Blanca Motor proposes to sell a similar 20W electric motor to SATT for 142 BRL per unit. Order cycle time is 18 days. Terms are listed as FCA, Puerto Novo. Price Per Unit Estimated Ocean Shipping Cost per unit Estimated US Customs duty per unit Park Electric 30,000 KRW 4,000 KRW 3,000 KRW Blanca Motor 2,600 ARS 200 ARS 130 ARS Exchange Rate 1173.30 KRW = 1 USD 99.31 ARS = 1 USD Answer the following questions: 1. Evaluate the selling price and related costs per unit offered by each supplier in US dollars (USD). Park Electric Blanca Motor Price Per Unit $ $ Estimated Ocean Shipping Cost per unit $ $ Estimated US Customs duty per unit $ $ Exchange Rate 1173.30 KRW = 1 USD 99.31 ARS = 1 USD 2. a. What costs, responsibilities and risks are assumed by the buyer (SATT) and the seller (Park Electric) under Incoterms 2020, DAP, Port of Baltimore? b. What costs, responsibilities and risks are assumed by the buyer (SATT) and the seller (Blanca Motor) under Incoterms 2020, FCA, Puerto Novo? DAP, Port of FCA, Puerto Novo Packaging goods for export and loading the container Factory to port transportation Payment of export duties (if any are due) Loading the container on the ship Paying for the ocean transport (carriage charges) Paying for the insurance on the international voyage Paying destination terminal charges for unloading freight Clearing US Customs (pay import duties & taxes) US transportation to final destination what total cost per motor will SATT 3. Considering both your responses to Questions 1 and directly incur? Park Electric Blanca Motor Cost per motor that SATT will directly incur $ $ 4. Besides direct cost considerations, what other factors should you consider during the supplier selection process? Other factors that should drive the supplier selection decision for SATT. 5. Which supplier do you believe will provide best combination of landed cost, quality, and reliability? Park Blanca Incoterms 2020 Rules Responsibility Quick Reference Guide XXX Inco Docs Freight Prepaid Terms Groups Any Mode or Modes of Transport Incoterm Freight Collect Terms Any Mode or Modes of Sea and Inland Waterway Transport Transport EXW FCA FAS FOB CFR CIF Ex Works Free Carrier Free Free On Cost and Cost (Place) (Place) Alongside Board (Port) Freight (Port) Insurance & Ship (Port) Freight (Port) At Buyer's On Buyer's Alongside On Board On Board On Board Disposal Transport Vessel Vessel Vessel Obligations & Charges: CPT CIP DAP DPU DDP Carriage Paid Carriage & Delivered at Delivered at Delivered TO (Place) insurance Paid Place (Place) Place Unloaded Duty Paid to (Place) (Place) At Named At Named Place At Named At Carrier At Carrier Place Unloaded (Place) Transfer of Risk Ship Place Export Packaging Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Loading Charges Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Delivery to Port/Place Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Export Duty, Taxes & Customs Clearance Origin Terminal Charges Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Loading on Carriage Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Carriage Charges Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Negotiable Negotiable Negotiable Negotiable Negotiable *Seller Negotiable **Seller Negotiable Negotiable Negotiable Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Insurance Destination Terminal Charges Delivery to Destination Unloading at Destination Import Duty, Taxes & Customs Clearance Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller After reviewing the demonstration video and looking over the slides, complete the following scenario questions and transfer your answers to the Week 8: Bonus Activity quiz in Canvas. Note that not every question on this worksheet will appear on the Canvas quiz. Be careful when transferring your answers. Case: Sound-Around Turntables Sound-Around Turntables (SATT) is a regional manufacturer of high-fidelity turntables. It has been in business in Traverse City, Michigan since 2018 and has steadily increased sales volume as U.S. sales of vinyl albums re-ignited. Robert Ritchie, CEO for SATT received an order for 12,500 turntables for Best Buy, a national electronics retailer. Production for this order will begin in late March and the customer order must be delivered on June 1. Since SATT builds to order, Ritchie needs to begin ordering parts from his global supply base soon. An important component is the turntable motor that is purchased from a global export company. Here are the two options that Richie is considering: Option 1: Park Electric Location: Busan, South Korea Background: Current supplier Option 2: Blanca Motor Location: Buenos Aires, Argentina Background: Potential new supplier The product is high quality and SATT has worked with Park for 3 years. However, the company recently raised its prices citing higher material costs and rising tariffs. The sample product is high quality, but SATT has never worked with Blanca. SATT likes the shorter supplier-to-factory distance and monthly deliveries. However, not much is known about this supplier or the political environment in Argentina Order release: Supplier (Park) will ship all units in the new order at one time on January 15. Order release: Supplier (Blanca) will make monthly deliveries of 2,500 units starting on December 1. Offer: Park Electric currently sells the 20W synchronous motor to SATT for 30,000 KRW per unit. Order cycle time is 47 days. Terms are listed as DAP, Port of Baltimore. Offer: Blanca Motor proposes to sell a similar 20W electric motor to SATT for 142 BRL per unit. Order cycle time is 18 days. Terms are listed as FCA, Puerto Novo. Price Per Unit Estimated Ocean Shipping Cost per unit Estimated US Customs duty per unit Park Electric 30,000 KRW 4,000 KRW 3,000 KRW Blanca Motor 2,600 ARS 200 ARS 130 ARS Exchange Rate 1173.30 KRW = 1 USD 99.31 ARS = 1 USD Answer the following questions: 1. Evaluate the selling price and related costs per unit offered by each supplier in US dollars (USD). Park Electric Blanca Motor Price Per Unit $ $ Estimated Ocean Shipping Cost per unit $ $ Estimated US Customs duty per unit $ $ Exchange Rate 1173.30 KRW = 1 USD 99.31 ARS = 1 USD 2. a. What costs, responsibilities and risks are assumed by the buyer (SATT) and the seller (Park Electric) under Incoterms 2020, DAP, Port of Baltimore? b. What costs, responsibilities and risks are assumed by the buyer (SATT) and the seller (Blanca Motor) under Incoterms 2020, FCA, Puerto Novo? DAP, Port of FCA, Puerto Novo Packaging goods for export and loading the container Factory to port transportation Payment of export duties (if any are due) Loading the container on the ship Paying for the ocean transport (carriage charges) Paying for the insurance on the international voyage Paying destination terminal charges for unloading freight Clearing US Customs (pay import duties & taxes) US transportation to final destination what total cost per motor will SATT 3. Considering both your responses to Questions 1 and directly incur? Park Electric Blanca Motor Cost per motor that SATT will directly incur $ $ 4. Besides direct cost considerations, what other factors should you consider during the supplier selection process? Other factors that should drive the supplier selection decision for SATT. 5. Which supplier do you believe will provide best combination of landed cost, quality, and reliability? Park Blanca Incoterms 2020 Rules Responsibility Quick Reference Guide XXX Inco Docs Freight Prepaid Terms Groups Any Mode or Modes of Transport Incoterm Freight Collect Terms Any Mode or Modes of Sea and Inland Waterway Transport Transport EXW FCA FAS FOB CFR CIF Ex Works Free Carrier Free Free On Cost and Cost (Place) (Place) Alongside Board (Port) Freight (Port) Insurance & Ship (Port) Freight (Port) At Buyer's On Buyer's Alongside On Board On Board On Board Disposal Transport Vessel Vessel Vessel Obligations & Charges: CPT CIP DAP DPU DDP Carriage Paid Carriage & Delivered at Delivered at Delivered TO (Place) insurance Paid Place (Place) Place Unloaded Duty Paid to (Place) (Place) At Named At Named Place At Named At Carrier At Carrier Place Unloaded (Place) Transfer of Risk Ship Place Export Packaging Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Loading Charges Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Delivery to Port/Place Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Export Duty, Taxes & Customs Clearance Origin Terminal Charges Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Loading on Carriage Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Carriage Charges Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Negotiable Negotiable Negotiable Negotiable Negotiable *Seller Negotiable **Seller Negotiable Negotiable Negotiable Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Insurance Destination Terminal Charges Delivery to Destination Unloading at Destination Import Duty, Taxes & Customs Clearance Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller