Alice Johnson is materials and distribution manager for Global Olympic Enterprises. She is responsible for all transportation, distribution, materials, and purchasing for her firm.
The company has just embarked upon a new venture in Africa that will involve moving Medical Equipment and supplies from Toronto to South Sudan for Pfizer Pharmaceuticals and to be delivered to Medicin Sans Frontier (Doctors Without Borders). She has hired your organization as her freight forwarding consultant and agent. You have identified two transportation choices:
1) move the freight by water, which takes 38 days, and
2) move it by air, which only takes 4 days, door to door.
The relevant costs in Susan's decision are as follows:
· freight by water is $2650 with delivery to the dock in Miami costing $385 and pier to plant delivery in Africa of $225. The air move would be $2,850 for door-to-door service
· documentation using the water mode would be $185 whereas the air move would cost $255 insurance by water would cost $780 per move; with air it would be $260
· packing and crating by water would be $666 per shipment; with air it would only involve stretch wrapping a special set of pallets for a total cost of $120
· the company hurdle rate (opportunity cost of capital) is 14%
· the value of the goods is $1,700,000 per shipment
Questions
1. Introduce the project by creating a Freight Consulting Company and a MARKETING description outlining the company background and credentials that qualify you for the role of freight consultant to assist Alice.
2. Calculate are the total costs of each method of shipping?
Without the holding costs (opportunity cost of capital)?
Including the opportunity cost of capital?
3. Fully outline the arrangements would you suggest to ensure the product's safe arrival (packaging, insurance & government partnerships with respect to security, TDG? What other government departments are involved?
4. Research the most appropriate routes and all modes that will be used in each case and outline them on a map. What criteria other than cost would you recommend she consider to justify your decision on mode(s)?
5. Explain which mode(s), INCOterm and transportation payment terms would you recommend for Global. Justify your answer. Complete the accompanied ICC Model Contract for the transaction and explain your decisions in it. Append the completed contract to your paper.
6. Outline all documentation would needed to support the transaction and ensure she gets paid. Please complete full price (estimated) quotation and a full set of relevant documents and append them to the report