Innovation Distribution Company: A Total Cost Approach Understanding Supply Chain Risk CaseThe initial purchase cost per unit paid to Dong Hai Supply is calculated as follows. The current exchange rate is 1 CNY China Yuan Renminbi = 0.14646 U.S. Dollar. As pointed out, the price per unit in Dong Hai supply is 547 ¥.
Therefore, the price per unit is 547 x 0.14646 = 80.11362.
The initial purchase cost per unit in U.S. Dollars is $80.11 (Frankel, 2013).
The average time for an order filling a TEU container to come from Dong Hai Supply in Chengdu, China to the distribution center in Alliance Fort Worth
Dong Hai Supply in Chengdu, China to the distribution center in Alliance Fort Worth
Mean
Variance
Standard Deviation
Time for processing and manufacturing order at Dong Hai
Moving Container by Rail from Chengdu to Shanghai
Loading to ship at Port of Shanghai
Pacific Ocean to Port of Long Beach
Clearing Customs and Unloading at Long Beach
Long Beach to Alliance Fort Worth
4
Total lead time for Dong Hai
43
11.9025
3.45
Actual Days for order in Transit
28
Therefore, the average time is 43 days.
ii. The average time for an order filling a TEU container to come from CousinsAg in Wahoo, Nebraska to the distribution center in Alliance Fort Worth
CousinsAg in Wahoo, Nebraska to the distribution center in Alliance Fort Worth
Mean
Variance
Standard Deviation
Time for processing and manufacturing order at CousinsAg
10
From supplier to Alliance Fort Worth
5
Total lead time for CousinsAg
15
1.2996
1.14
Actual days for order in Transit
5
Therefore, the average time is 15 days.
Question 3
The cost to ship a TEU container from Dong Hai Supply in Chengdu, China, to IDC's Alliance Fort Worth Distribution Center.
IEC charges ¥ 12,414.5 for each TEU shipped. Import tariffs and duties are $325 per TEU and shipping cost from Long Beach to AFW is $2,250.
Remember, 1 CNY China Yuan Renminbi = 0.14646 U.S. Dollar or use the $80.11 rate....
A Total Cost Approach to Understanding Supply Chain Risk Using the current exchange rate, what is the initial purchase cost per unit (in U.S. dollars) paid to Dong Hai Supply? (Do not include transportation costs.) The exchange rate between the U.S. Dollar and the Chinese Renminbi is: Dollar = 6.92 CNY China Yuan Renminbi CNY China Yuan Renminbi = 0.1445 U.S. Dollar The quoted price by Dong Hai Supply at the factory is 547 China
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