Inventory Management/ Global Sourcing m

Week 6

Case—Grainger: Reengineering the China/U.S. Supply Chain (p.457)

Please address the following.

• Evaluate the current China/Taiwan logistics costs. Assume a current total volume of 190,000 CBM and that 89% is shipped direct from the supply is plants in containers. Using the data from the case and assume that the supplier-loaded container is 85% full. Assume that consolidation centers are run at each of the four port locations. The consolidation centers only use 40-foot containers and fill them to 96% 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 you include U.S. port costs in this part of the analysis

Operations and Supply Chain Management : The Core

3rd ed.
F. Robert Jacobs

SAMPLE SOLUTION

Inventory Management

Basic Data (as provided in the case study)

	Details
Total Current Capacity (CBM)	190,000
Percentage of Direct Ship	89 percent
Direct Ship Capacity	169,100
Consolidation Point Capacity	20,900

Workings

Consolidation Point Capacity = Total Current Capacity – Direct Ship Capacity

= 190,000 – 169,100 = 20,900

Computation of Shipping Charges

Direct Ship by Container Category	40 – foot	20 – foot
Capacity in percentage (%)	XXXX	XXX
Volume (CBM)	133,589	XXX
Container Capacity in percentage	XXX	85 percent

Workings

Volume (40-foot) = Capacity in percentage × direct ship capacity

= 79% × 169,100 = 133,589

Volume (20-foot) = Capacity in percentage × direct ship capacity

21% × 169,100 = 35,511

Consolidation Point by Container Category

Total Volume in Percentage	100 percent
Consolidation Point Capacity	XXX
Container Capacity Utilized	96%

Shipping Costs

Details	40-foot	20-foot
Container Volume (CBM)	67	34
Number of Containers Shipped	2,XX1	1,229
Shipping charges per Container	$ 6XX0	$ 4X80
Shipping Charges by the size of the Container	$ 1,XXX,600	$ 589,XX
Total Shipping Expenditure	$ 2,192,XXX