South Korean TV TCO - Fall 2023

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Grand Valley State University *

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Industrial Engineering

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Dec 6, 2023

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docx

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Uploaded by DoctorExploration9792

South Korean TV Total Cost Analysis Calculate the total cost for a television purchased from a South Korean supplier given the information provided below (be careful when making unit of analysis conversions and make sure to show our work).  Price paid to the supplier for each television: $87.50  Cubes (cubic foot – how much space each TV takes on the container) per TV: 12 cubic feet  Cubes per pallet: 240 cubic feet  Shipping costs: $4,750 per container to the Los Angeles Port  Cubes per container: 2,400 cubic feet (standard 40’ container)  Customs Fees: 2% of the value of the container (value is the price of all of the TV’s inside the container)  Duties: 6% of the value of the container (value is the price of all of the TV’s inside the container)  U.S. Port Handling: $1,500 per container  Insurance: $480 per container  Transportation from Port to Warehouse: $1,200 per container  Transportation from Warehouse to Customer: $900 per container  Warehouse charges (moving): $240 per container  Quality control (cycle counts, pilferage, customer prep.): $7.50 per TV Scenario #1: Complete the Total Cost of Ownership analysis in the Excel file in blackboard. Scenario #2: Copy the completed Scenario #1 TCO analysis into another sheet in Excel. You and your South Korean supplier are evaluating different cost reduction ideas. They have introduced a new packaging that will reduce the TV box size. With this change, the cubes / TV is reduced to 10 cubic feet. However, due to the cost of the new packaging, the Price of the TV will increase by $2.50. Should you accept their proposal? Yes we should because the cost change per TV went down $6.65, and the amortized price per TV went down. Scenario #3: Copy the completed Scenario #2 TCO analysis into another sheet in Excel. After testing the new packaging, you accepted the packaging change proposal. Post-Covid, shipping costs have increased substantially. Shipping costs to the Port of LA is now $22,000 per container. US Port Handling cost is now $2,000 per container, and transportation to warehouse is now $1,500 per container. Evaluate the cost model with these changes. Scenario #4: Copy the completed Scenario #3 TCO analysis into another sheet in Excel.

South Korean TV Total Cost Analysis Your logistics department is developing another logistics route from South Korea to Grand Rapids to reduce cost. The route is through the Port of Seattle. Evaluate costs given the following table: To Port of Seattle / Container $19,500 US Port Handling Fee / Container $2,500 Transport to Warehouse / Container $200 Is this proposal a lower or higher cost than the current (scenario #3) cost? Should your company change logistics routes? This proposal is a lower cost than the current (scenario #3) cost, and the cost reduction is 6.1% all around.

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