LOG 125: Ch 11 Global Transportation Assignment Scenario 1 You are a U.S. business selling high-end bicycles. You want to source bicycles from Germany to sell in your chain of 20 bike stores across the U.S. You are considering the choice between air shipments and ocean container shipments. You will buy approximately 50 bicycles per week for an average of $6,000 each. If you ship by air, your lead time is 5 days. You can ship 50 per week. You will have an average of 200 bicycles in inventory at all times. Your inventory carrying cost is 20%. Transportation costs by air are $400 per bicycle. If you ship by ocean container, you will ship 600 bicycles per month with a 20 day lead time (this includes the ocean voyage, customs clearance, and drayage to the bike stores). You will have an average of 600 bicycles in inventory at all times. Transportation costs by ocean are $120 per bicycle. Calculate the following: 1. Which is the better solution? What makes this the better solution? Are there other considerations to be made? What might be other considerations and why are they important to this analysis? 2. What is the impact to inventory - both in-transit and in-stock? 3. Offer a better solution to this scenario? Scenario 2 Your business has exploded, and you are now buying 250 bicycles per week for an average of $6,000 each. If you ship by air, your lead time is 5 days. You can ship 300 per week. You will have an average of 800 bicycles in inventory at all times. Your inventory carrying cost is 20%. Transportation costs by air are $400 per bicycle. If you ship by ocean container, you will ship 3000 per month with a 20 day lead time (this includes the ocean voyage, customs clearance, and drayage to the bike stores). You will have an average of 3,000 bicycles in inventory at all times. Transportation costs by ocean are $120 per bicycle. 4. Which is the best option now? Use the table above and show all costs. State the criteria you are basing your answer on. Scenario 3 You have chosen to ship by ocean. You know the purchase price and transportation costs per bicycle. There is also a $30 port fee and a tariff of 7%. 5. What is the final delivered cost? (Hint: The tariff is calculated on the purchase price with transportation cost included)