Question

This question is about Sanyo Case, similar to the case covered in class. Based on data below please answer the following question:

If San-pod is assembled in Greece, what is the total freight costs regarding Part B (just Part B)?

Costs, demand, weight, and tariff data

Annual demand for San-pod in Germany: 30,000

Annual demand for San-pod in USA: 10,000

Labor costs

China ($): $3 per unit;   Greece ($): $4.5 per unit; Mexico ($): $5 per unit

Product weight per unit

Assembled San-pod (g): 90

Part A from Malta (g): 50

Part B from Japan (g): 40

Product purchase price

Part A FOB Malta ($ per unit): $10

Part B FOB Japan ($ per unit): $30

Tariff rates (%):

Japan 6%; China 7%; Mexico 8%; USA 5%; Greece 7%; Germany 7%

Combined rates for transportation and insurance between respective points (I&F $ per 100g)

Malta to Greece: 0.6

Malta to China: 2.2

Malta to Mexico: 2.5

China to Germany: 2.3

China to USA: 2.75

Greece to Germany: 0.6

Greece to USA: 2.5

Mexico to Germany: 0.8

Japan to China: 0.8

Japan to Greece: 2.5

Mexico to USA: 0.4

Japan to Mexico: 2.3

Group of answer choices

$44,444

$32,800

$14,222

$40,000

Answer 1

As per the details given above,

The Annual demand required is as under:

Annual demand for San-pod in Germany: 30,000

Annual demand for San-pod in USA: 10,000

Total: 40000

Number of units of Part B to be imported = 40000

Weight of 40000 units of Part B = 40000 * 40 gms = 1600000 gms.

Cost of Insurance and Freight from Japan to Greece = 2.5 per 100 gm.

Thus, cost for 1600000 gms = 1600000 * 2.5/100

= $40000

Therefore, Option d)$40000 is the correct answer.