1. What is the role of lead time, transportation costs and production costs in terms of the cost decisions?
3-4 solid paragraphs please. - use any of the information below if necessary.
1. The bill of material for a bike is as follows:
2. The forecast annual demand for of bikes in the United States is 20,000 units. The order is due within 30 days or a penalty of $0.15 per bike is assessed for every day the order is late. Current production cost is $50 per bike for locally produced in the U.S. We are trying to see if we can find a cheaper global option.
3. If your supply chain goes overseas the additional management administrative overhead cost is $ 20,000 more a year (for phone calls, flying to overseas locations etc).
4. Cross border transportation cost is $1,000 for a full or partial load. Transportation within a country is $500 per load. Container size is 16 x 8 x 8 ft or a total of 1,024 cubic feet. We can assume that there is some loss in packing and the actual space available is 1,000 cubic feet per container.
5. Choose one particular supply chain pattern and cost it out - you may ship sub-components from one country to another. Note that finding an optimal solution might be difficult.
6. Costs to procure/assemble a bicycle.
Cost ($/unit) US China India Mexico Korea
Frame 1 1.5 2 2.5
Seat 2.5 2 1.5 2
Handle 2 3.5 1 1
Rim 3 2 5 2
Spokes (per 1000) 2 1 2 3
7. Lead times to procure/produce a bicycle. Assume that assembly or subassembly can be done in 15 days irrespective of the volume.
Days US China India Mexico Korea
Frame 30 10 30 10
Seat 25 30 40 5
Handle 20 25 25 10
Rim 30 5 10 10
Spokes (per 1,000) 21 10 5 5
8. Transportation times.
Days (FromTo) US China India Mexico Korea
US 10 35 40 10 20
China 30 10 50 35 10
India 40 50 20 45 30
Mexico 10 50 60 10 35
Korea 20 20 45 40 5
9. Volume requirements per unit.
Volume/unit (cubic feet) Number of units Cubic feet Number of containers
Spokes (per 1000) .5
10. Production cost and time components per unit.
Country Labor ($/hr) Hours to assemble a wheel Cost to assemble a wheel Hours to assemble a bicycle Cost to assemble a bicycle
China .2 .2 .5
India .1 .3 .6
Mexico 1 .2 .6
Korea 2 .1 .3
Global Shipping Model
2. What is the role of lead time, transportation costs and production costs in terms of the cost decisions?
3-4 solid paragraphs please.
I think this helps to address the questions. ___________________________________________________________________________________________
1.What is the role of lead time, transportation costs and production costs in terms of the cost decisions?
a. What is the role of lead time -The time period between an order for a product and delivery of the final product is what is referred to as lead time. Small orders of common items can have a few hours lead time, but a larger order of part which must be custom-made will have a much longer lead time of weeks, months or longer. Lead time is dependent upon many factors such as the time it takes to make the production components to the speed of output and the system of delivery.
"Production lead ...
The expert examines the global shipping model for Biz Ops. The production cost and time components per unit are given.