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Executives at Leonesse Cellars, a premium winery in Southern California, were surprised to learn that shipping wine by sea to some cities in Asia was less expensive than sending it to the East Coast of the United States, so they started shipping to Asia (David Armstrong, “Discount Cargo Rates Ripe for the Taking,” San Francisco Chronicle, August 28, 2005). Because of the large U.S. trade imbal-ance with major Asian nations, cargo ships arrive at West Coast seaports fully loaded but return to Asia half to completely empty. Use the concept of opportunity cost to help explain the differential shipping rates.

Executives at Leonesse Cellars, a premium winery in Southern California, were surprised to learn that shipping wine by sea to some cities in Asia was less expensive than sending it to the East Coast of the United States, so they started shipping to Asia (David Armstrong, “Discount Cargo Rates Ripe for the Taking,” San Francisco Chronicle, August 28, 2005). Because of the large U.S. trade imbal-ance with major Asian nations, cargo ships arrive at West Coast seaports fully loaded but return to Asia half to completely empty. Use the concept of opportunity cost to help explain the differential shipping rates.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Executives at Leonesse Cellars, a premium winery in Southern California, were surprised to learn that shipping wine by sea to some cities in Asia was less expensive than sending it to the East Coast of the United States, so they started shipping to Asia (David Armstrong, “Discount Cargo Rates Ripe for the Taking,” San Francisco Chronicle, August 28, 2005). Because of the large U.S. trade imbal-ance with major Asian nations, cargo ships arrive at West Coast seaports fully loaded but return to Asia half to completely empty. Use the concept of opportunity cost to help explain the differential shipping rates. 

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