1. Why will landed costs become a more important consideration as firms participate in more international logistics arrangements?
2. Can logistics be an area of core competency for a company? Please provide an example.
3. Why are companies interested in the incremental cost per unit added along the supply chain, rather than the total cost added at each step along the supply chain?
4. BJB manufactures high-end bikes and is looking for a source for pedal sets. BJB needs 1,625 sets a month. Supplier A is a domestic firm and Suppliers B and C are located overseas. Cost information for the suppliers is as follows:
Supplier A Supplier B Supplier C
Price per set $101 $95 $93
Packing Cost per set $2 $3.25 $4
Total inland Freight $950 $950 $1,100
Total International transportation costs $3,750 $6,000
a. Calculate total landed cost per unit and per month for the three potential suppliers. Who is the cheapest? Who is the most expensive? SHOW YOUR WORK
b. Suppose that international and inland freight are fixed for volumes up to 3,500 sets a month. Under this assumption, which supplier would have the lowest landed cost if demand were cut in half? If demand doubled?
c. What factors other than landed costs might BJB consider when selecting the supplier?