Technobikes distributes and sells sport bicycles all over Mexico. The company owns and operates retail stores in most of the Mexican cities. The stores place their orders to a central distribution center located in Monterrey, Mexico.

The company is currently planning the procurement of SKU WT246. This bicycle is sourced from Fuji Bicycle Co. Ltd. and could be shipped from any of two factories located in Guangzhou and Yangzhou, China. The products are shipped in full containers (TEU) to the distribution center in Monterrey.

Containers loaded at the Guangzhou plant have two options for inland transportation. They can be shipped by truck to the port of Yantian, which costs $35 per container, or to the port of Hong Kong with a cost of $45 per container. Shipping lines offer regular services from Yantian to Mazatlan, Mexico charging $1350 per container. Similar shipping services are offered from Hong Kong to Mazatlan at a cost of $1350 each container. Shipping lines also offer services from Hong Kong to Manzanillo, Mexico with a charge of $1350 per container.

Containers loaded at the Yangzhou plant are shipped by truck to the port of Shanghai with a cost of $40 per container. Shipping lines offer frequent services from Shanghai to Mazatlan and Manzanillo with a cost of $1400 per container.

Finally, the containers are shipped by truck from the ports of Mazatlan or Manzanillo to their final destination. Shipping one container from Mazatlan to Monterrey costs $850 and $1050 from Manzanillo to Monterrey.

The possible paths and their transportation costs, as described in detail in the previous paragraphs, are shown below:

Diagram of pathways with transportation costs ($/container)

What is the best way to ship the products from the factory door to the distribution center in Monterrey? In other words, which path provides the lowest transportation cost?

Select the best answer

Guangzhou-Hong Kong-Mazatlan-Monterrey

Guangzhou-Yantian-Mazatlan-Monterrey

Yangzhou-Shanghai-Manzanillo-Monterrey

Yangzhou-Shanghai-Mazatlan-Monterrey

Guangzhou-Hong Kong-Manzanillo-Monterrey

unanswered

What is the minimum transportation cost per container?

Round your answer to the nearest integer.

Part 2

0 points possible (ungraded)

Demand for containers is normally distributed with an average of 900 containers per year and annual standard deviation of 90.0 containers. Technobikes currently purchases the bicycles at $100 per bicycle and sells them at $250 per unit.

The company takes ownership of the shipments at the factorys dock and will incur in holding costs from that point on. Technobikes annual holding charge is 15% and the company includes the cost of transportation in the cost of SKU WT246 when calculating the EOQ, inventory and purchase costs. It costs $1900 to make an order, independent of the number of containers shipped. One container can carry up to 250 bicycles. Technobikes cycle service level target is 95% and uses 350 days per year for planning purposes. Note: Make sure to calculate the EOQ in container units and roundup the number of containers to order (e.g. 8.12 rounds to 9).

The average transit times for inland and water transportation and the average waiting times at ports are displayed in the following table:

Path	Inland Origin	Port Origin	Water	Port Destination	Inland Destination
Guangzhou-Yantian-Mazatlan-Monterrey	1	2	25	5	5
Guangzhou-Hong Kong-Mazatlan-Monterrey	2	3	21	5	5
Guangzhou-Hong Kong-Manzanillo-Monterrey	2	3	17	3	3
Yangzhou-Shanghai-Mazatlan-Monterrey	1	3	20	5	5
Yangzhou-Shanghai-Manzanillo-Monterrey	1	3	19	3	3

The possible paths, their transportation costs and average times, as detailed in the previous table, are shown below:

Diagram of pathways with transportation costs ($/container) and average transit/waiting times (days)

Notation example:

• Yantian: 2d means 2 days of waiting time on average.
• Yantian-Mazatlan: $1350, 25d means $1350 of transportation cost per container and 25 days of transit time on average.

After analyzing the data, the company identified the path that provides the lowest expected annual total cost. This optimal path implies shipping the bicycles at the Guangzhou plant, transporting them through the ports of Hong Kong and Mazatlan and finally arriving to the distribucion center in Monterrey.

What is the annual purchase cost of the optimal path (Guangzhou-Hong Kong-Mazatlan-Monterrey)?

Round your answer to the nearest integer.

unanswered

What is the annual ordering cost of the optimal path (Guangzhou-Hong Kong-Mazatlan-Monterrey)?

Round your answer to the nearest integer.

Part 3

What is the annual cycle stock cost of the optimal path (Guangzhou-Hong Kong-Mazatlan-Monterrey)?

Round your answer to the nearest integer.

What is the annual safety stock cost of the optimal path (Guangzhou-Hong Kong-Mazatlan-Monterrey)?

Round your answer to the nearest integer.

What is the annual pipeline inventory cost of the optimal path (Guangzhou-Hong Kong-Mazatlan-Monterrey)?

Round your answer to the nearest integer.

Part 4

Technobikes have collected data about the transit and waiting time variability. The standard deviation of the transit times for inland and water transportation and the standard deviation of the waiting times at ports are displayed in the following table:

Path	Inland Origin	Port Origin	Water	Port Destination	Inland Destination
Guangzhou-Yantian-Mazatlan-Monterrey	1	1	4	3	3
Guangzhou-Hong Kong-Mazatlan-Monterrey	2	3	5	3	3
Guangzhou-Hong Kong-Manzanillo-Monterrey	2	3	3	2	2
Yangzhou-Shanghai-Mazatlan-Monterrey	1	1	2	3	3
Yangzhou-Shanghai-Manzanillo-Monterrey	1	1	3	2	2

The possible paths, their transportation costs, average times and standard deviation of the transit times, as detailed in the previous table, are shown below:

Diagram of pathways with transportation costs ($/container), average transit/waiting times (days) and standard deviation of the transit/waiting times (days)

Notation example:

• Yantian: 2d, 1d means 2 days of waiting time on average and 1 day of standard deviation of the waiting time.
• Yantian-Mazatlan: $1350, 25d, 4d means $1350 of transportation cost per container, 25 days of transit time on average and 4 days of standard deviation of the transit time.

Given the new information, the company identified a new path that minimizes the expected annual total cost of SKU WT246. This new optimal path requires to ship the goods at the Yangzhou plant and transport them through the ports of Shanghai and Mazatlan.

What is the annual safety stock cost of the new optimal path (Yangzhou-Shanghai-Mazatlan-Monterrey)?