Feasible, the Full Cost Structure Must Be

¶ … feasible, the full cost structure must be analyzed. The best way to make this determination is by starting with the retail price and working backwards. Ultimately, what we need to know is whether or not the order will generate sufficient contribution to fixed costs in order to be profitable. The fixed costs are known, at $8 per unit. Thus, the contribution margin needs to be higher than 8% for this order to be viable on a financial basis. The questions will be addressed on an individual basis. This question makes no sense.

There is a verb missing: "Will you be able to the requirements…" These wallets should be imported from China because that is where our production facility is located. There is nothing in the case that would indicate a choice between locations of production. Handle? This verb is vague -- what is meant by "handle"? A professional writer should be hired if writing coherent questions is a problem.

If this question refers to scheduling -- "to schedule" is a perfectly good verb in the English language -- then the order can be completed without any difficulty. Even assuming a factory in China only works five days per week -- something nobody who has been to China would ever assume -- there is enough time. It takes 13.3 days (14 is an acceptable estimate) to produce 20,000 units. Starting August 8th, 2011, this would result in completion on August 25th.

It takes 35 days to ship to the Nordstrom warehouse via boat, which makes delivery September 28th/29th, before the delivery window. It is not mentioned how long customs might take, but there is clearly time for customs clearance in this scenario, as there are 16 days from the scheduled arrival until the deadline for arrival. 4/5) The wholesale price is calculated by working backwards from the retail price. Nordstrom's markup is 60% and we shall assume they are not paying the cost of shipping.

Their retail price is $44.95, so the wholesale price needs to be $28.09. 6) Assuming the word "duty" in this context means "commission," this would be 6% of the wholesale price. Thus, the duty would be (.06)(28.09) = $1.6854 per unit. Over 20,000 units, this would be $33,708.00 7) The production timeline would be proactive. There are any number of potential delays that could occur, so it is best to start working on this immediately. The production would be the full 1500 units per day for 13.333 days. This means production starts on Monday August 8th and ends on Thursday August 25th, 2011.

8) The transit time line consists of two parts. The first part starts with shipping from China on Friday August 26th. By boat, this will arrive in the U.S. At the Port of LA on Sunday, September 25th. This gives us one week to get the goods to Nordstrom. Although not mentioned in the case, a reasonable assumption is that customs clearance will take a few days. There will be six days of transit time to Nordstrom (we use cross-docking so the goods do not sit in our warehouse).

With zero customs clearance time, this means arrival at Nordstrom of October 1st. Whatever customs clearance or delays might occur, our goods will arrive in the appropriate window. 9/10) The key players involved are the manufacturer, the agent/importer and the buyer at Nordstrom. There are other important players as well. The shipper is important, and.