Case 5-1 Let There Be Light

Lamp Shade Company

Submitted By: Hend Mohamed Saiid Abdul Moneim

Submitted to: Dr. Islam El- Nakib

7/24/2011

Case 5-1 Let There Be Light

Jul. 24

Case Study Analysis

Company facts: Located Madison, Wisconsin

Product Facts: 5,400 identical Lamp Shade (to Asia)

Design Options: Style A: cylinder, 11 x 11 Style B & C: Cone-shaped

Terms of Sale: Delivery to the foreign port where the buyer would take possession Transportation to port of Oakland: Land rate: $1,000 per 40-ft container (8w, 8.5h, 40 l) Max weight: 44,000 lbs.

Transportation from Port of Oakland to overseas port: Ocean rate: $22 per ton (2,000 lbs.) Measurement ton: 40 ft3 = 1 ton Insurance Cost: 2% of the value of shipment

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Packaging Information: Style A 4.00$ 0.60$ 12 by 12 by 12 Inches 1 10 Style B 5.00$ 2.00$ 12 by 12 by 48 Inches 6 62 Style C 6.00$ 3.00$ 12 by 12by 50 Inches 10 101

Manuf. Cost (Per Piece) Packaging Cost (Each) Package Size Number of Pieces Per Pack Package Weight ( Pounds)

Some Important Rules: 1 Foot = 12 Inches 1 ton = 2000 lbs. (Pounds) Cubic Feet = Length X Width X Height

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Case Answers
Q1: How many styles A shades can be loaded into an intermodal container? Since;
the intermodal container Size = 8 feet wide by 8.5 feet high by 40 feet Long Then lets turn these measurement into Cubic feet ; if we calculated them as they are 8 * 8.5 * 40 we will get 2720 cubic feet but we will ignore the 0.5 ( 6 inches area ) of the 8.5 height as they are not used since the normal package is of size 12 by 12 by 12 inches. So; the intermodal container Size in Cubic feet = 2560 1

Then we have to calculate the total size of one package of shades from style A; this will require the conversion of the given measurements into feet & then to Cubic feet to unify the units. So; 12 by 12 by 12 inches in feet = 12/12 by 12/12 by 12/12 feet = 1 by 1 by 1 feet Then convert these measurements into Cubic feet. So the package size of style A in cubic feet= 1 * 1 * 1 = 1 (referring to some important rules). 2 From Findings 1 & 2 We will divide the Size of the intermodal container by the size of the style A Package in order to get the number of packages form style A that the container can hold 2560/ 1 = 2560 packages The Package or the box contains one shade so 2560 * 1 = 2560 shades that an intermodal container can hold from shades of style A. So ; since one intermodal container can hold from Style A 2560 shades; and we want to deliver 5400 identical lamp to Asia so we will be needing 5400/2560 = 2.10 ( ~ approx.) = 3 containers PS. Quoting from the case the load could not exceed 44,000 pounds per loaded container because of highway weight restrictions so for verifications: The weight of each shade = 9 pounds SO; 9 * 2560 shades = 23040 pounds; which means that the load per one container in pounds is equal to 23040 pounds (so we are in the safe side by 20960 pounds per loaded container)

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Q2: How many styles B shades can be loaded into an intermodal container?

As previously mentioned;

Since;
the intermodal container Size = 8 feet wide by 8.5 feet high by 40 feet Long And we already mentioned that we are going to ignore the top 6 inches (0.5) because they are unused; So; the intermodal container Size in Cubic feet = 2560 1

Then we have to calculate the total size of one package of shades from style B; this will require the conversion of the given measurements into feet & then to Cubic feet to unify the units. So the package size of style B in cubic feet= 1 * 1 * 4 = 4 (referring to some important rules). 2 Then we will divide the size of container by the size of the package to know how many packages the container could hold we will get: 2560/4 = 640 packages 3 Then in order to get the number of shades that an intermodal container can hold ; we will multiply the number of packages (640) by the number of shades that one pack can hold which are 6 shades to get the total number of shades that an intermodal container can hold from style B. 640 Packages * 6 shades/package = 3840 Shades (an intermodal container can hold from Style B) So ; since one intermodal container can hold from Style B 3840 shades; and we want to deliver 5400 identical lamp to Asia so we will be needing 5400/3840 = 1.4 ( ~ approx.) = 2 containers PS. Quoting from the case the load could not exceed 44,000 pounds per loaded container because of highway weight restrictions so for verifications: The container can hold 640 packages of style B so 640 (packages that an intermodal can hold of style B) * 62 pounds (the total weight of one package) = 39680 pounds which means that the load per one container in pounds is equal to 39680 pounds; (so we are in the safe side by 4320 pounds per loaded container)

Case 5-1 Let There Be Light

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Q3: How many styles C shades can be loaded into an intermodal container?
As previously mentioned;

Since;
the intermodal container Size = 8 feet wide by 8.5 feet high by 40 feet Long And we already mentioned that we are going to ignore the top 6 inches (0.5) because they are unused; So; the intermodal container Size in Cubic feet = 2560 1

Then we have to calculate the total size of one package of shades from style A; this will require the conversion of the given measurements into feet & then to Cubic feet to unify the units. So the package size of style C in cubic feet= 1 * 1 * 4.1 (Approx. to 4) = 4 (referring to some important rules). 2 Then we will divide the size of container by the size of the package to know how many packages the container could hold we will get: 2560/4 = 640 packages 3 Then in order to get the number of shades that an intermodal container can hold ; we will multiply the number of packages (640) by the number of shades that one pack can hold which are 10 shades to get the total number of shades that an intermodal container can hold from style C. 640 Packages * 10 shades/package = 6400 Shades (an intermodal container can hold from Style C) So ; since one intermodal container can hold from Style C 6400 shades; and we want to deliver 5400 identical lamp to Asia so we will be needing only 5400 out of 6400 so technically ; since one container can hold 6400 shades; so also one container will hold our desired 5400 identical shades.

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PS. Quoting from the case the load could not exceed 44,000 pounds per loaded container because of highway weight restrictions so for verifications: Since the total weight of one package of style C = 101 pounds and the one package holds 10 shades so; the weight of one shade = 101/10 = 10.1 pounds So since we want to transfer only 5400 shades; so 5400 shades * 10.1 pounds = 54540 pounds Per container; which means that we have here Excess (overweight) by 10540 pounds per load; therefore we will need 2 containers and each one will approximately withstands about (54540/2 = 27270 pounds).

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Q4: What are the total costs of delivering the style A shades to the port of importation?

Item Shade

Packaging Intermodal containers (3) The land rate to Oakland

Cost parameters $4 ( cost per Shade) x 5,400 ( needed to be transfer) $.60 x 5,400

Total cost $21,600

$3,240 $3,000 $556 Since the 40 Cubic feet container = 1 ton and the box of style A = 1 Cubic feet. So; the 1 cubic feet box = 0.025 tone. Since; we have 5400 package of style A to be shipped so; 0.025 * 5400 = 135 tones So the ocean freight rate will be: 135 tones * 22 $ = 2970 $ $31,366

$1,000 x 3 (needed containers) Insurance ( from the value $27,800 (Costs up to this point) x .02 of the shipment) $22 per 40 cubic feet Ocean freight rates Since the ocean congruence used a measurement ton that indicated that for bulky loads very 40 cubic feet would equal 1 ton for rate making purposes ; I used the method of 40 cubic feet as the indicator not the 2000 pounds.

Total

Case 5-1 Let There Be Light

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Q5: What are the total costs of delivering the style B shades to the port of importation?
Item Shade Packaging Intermodal containers (2) The land rate to Oakland Insurance ( from the value of the shipment) Ocean freight rates Since the ocean congruence used a measurement ton that indicated that for bulky loads very 40 cubic feet would equal 1 ton for rate making purposes; I used the method of 40 cubic feet as the indicator not the 2000 pounds. Cost parameters $5 x 5,400 $2 x 900 $1,000 x 2 $30,800 x .02 $22 per 40 cubic feet Total cost $27,000 $1,800 $2,000 $616 Since the 40 Cubic feet container = 1 ton and the box of style B= 4 Cubic feet. So; the 4 cubic feet box = 0.1tone. Since; we have 900 package of style B ( 5400/6 to be shipped so; 0.1 * 900 = 90 tones So the ocean freight rate will be: 90 tones * 22 $ = 1980 33396 $

Total

Case 5-1 Let There Be Light

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Q6: What are the total costs of delivering the style C shades to the port of importation?
Item Shade Packaging Intermodal containers (2) The land rate to Oakland Insurance ( from the value of the shipment) Ocean freight rates Since the ocean congruence used a measurement ton that indicated that for bulky loads very 40 cubic feet would equal 1 ton for rate making purposes; I used the method of 40 cubic feet as the indicator not the 2000 pounds. Cost parameters $6 x 5,400 $3 x 540 $1,000 x 2 $36020 x .02 $22 per 40 cubic feet Total cost $32,400 $1,620 $2,000 $720.4 ~ 720 $ Since the 40 Cubic feet container = 1 ton and the box of style C= 12/12 by 12/12 by 50/12 = 1 by 1 by 4.167 feet and 4.16667 cubic feet So; the 4 cubic feet box = 0.104tone. Since; we have 540 package of style C ( 5400/10 to be shipped so; 0.104 * 540 = 56.25 tones So the ocean freight rate will be: 54 tones * 22 $ = 1235.5 ~ 1236 37977.5 ~37978$

Total

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Case 5-1 Let There Be Light

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Q7: Which style would you recommend? Why?

If we compared between the total cost of each style in order to get delivered to the port of importation we will find that style A is the least expensive.
Manuf. Cost (Per Piece) Packaging Cost (Each) Package Size Number of Pieces Per Pack Package Weight ( Pounds) Style A 4.00$ 0.60$ 12 by 12 by 12 Inches 1 10 Style B 5.00$ 2.00$ 12 by 12 by 48 Inches 6 62 Style C 6.00$ 3.00$ 12 by 12by 50 Inches 10 101

Also; from the above data as we can see while production; the manufacturing cost per shade of style A is the least expensive too as it costs 4 $ while the style B & C costs 5 $ and 6 $ respectively. Even the packaging cost is cost effective in style A while B & C score more. Basically; the above table shows; more relevant information that support the decision of recommending style A such as package weight and package size. Besides; Style A is the only style that scored the highest number of shades that an intermodal container can hold even without exceeding the weight limits 44000 Lbs.

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Case 5-1 Let There Be Light

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