Evaluate the current china/taiwan logistics costs. assume a current total volume of 190,000 cbm and that 89 percent is shipped direct from the supplier plants in containers. use the data from the case and assume that the supplier-loaded containers are 85 percent full. assume that consolidation centers are run at each of the four port locations. the consolidation centers use only 40-foot containers and fill them to 96 percent capacity. assume that it costs $480 to ship a 20-foot container and $600 to ship a 40-foot container. what is the total cost to get the containers to the united states? do not include u. s. port costs in this part of the analysis.

The total cost involved in shipping the containers to country U.S is $2,594,930

Explanation:

Consider the following information regarding Company WWG:

Total Current volume (CBM) = 190,000  

Direct shipping percentage = 0.89  

Direct ship Volume (CBM) = 169,100  

Consolidation center volume = 190,000 - 169,100 = 20,900

Calculate the shipping cost of the company as shown below:  

Shipping Cost calculations

Direct ship by Container type (in Feet)  20    40  

Volume (%)                            0.21    0.79  

Volume (CBM)                169,100*0.21          169,100*0.79

                                                                          = 35,511           =133,589

Container capacity used         85%    85%

Container center by container type

Volume (%)= 100  

Volume (CBM) = 20,900

Container capacity used = 96%

Container capacity (CBM) (34)  

Container shipped= 35,511/ (34*0.85) =1,229  

Shipping Cost per container = $480

Shipping Cost by container size ($) = 1,229*480 4589,920

Container capacity (CBM) (67)      

Container shipped  = 133,589/ (0.85*67) + 20,900/ (0.96*67) = 2,671  

Shipping Cost per container = $600

Shipping Cost by container size ($) = 2,671*600 = $1,602,600

Calculate the total shipping cost as shown below:  

Total shipping cost = $589,920+$1,602,600 = $2,192,520

Calculate the consolidation center operating cost as shown below:

Number of centers = 4

Annual fixed cost per center = $75,000

Total annual fixed cost = $75,000*4 =$300,000

Variable cost per CBM = $4.9

Total annual variable cost = 20,900*$4.9 = $102,410

Total annual consolidation center costs = $300,000+$102,410= $402,410

Calculate the total cost involved in shipping containers to the Country U as shown below:

Total Cost = Total Shipping Cost + Total Annual Consolidation center Cost  

     = $2,192,520 + $402,410

     = $2,594,930

Hence, the total cost involved in shipping the containers to country U.S is $2,594,930.

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