Susan Sheehan is materials and distribution manager for Global Enterprises, she is responsible for all transportation,distribution,materials and purchasing for this large multi-national firm.
The company has just embarked upon a new venture in Central America that will involve moving AIDS Antiretroviral pharmaceuticals from Toronto to La Ceiba,Honduras,Central America.Susan has two transportation choice.
1)move the freight by water,which takes 21 days,and
2)move it by air,which only takes three days,door to door.
The relevant costs in Susan’s decision are as follows:
– freight by water is $1,500 with delivery to the dock in Miami costing $345 and pier to plant delivery in Honduras of $120.The air move would be $2,900 for door-to-door service
-documentation using the water mode would be $180 whereas the air move would cost $150
-insurance by water would cost $900 per move,with air it would be $850
-packing and crating by water would be about $325 per shipment;with air it would only involve stretch wrapping a special set of pallets for a total cost of $140
-the company hurdle rate (opportunity cost of capital) is 12%
-the value of the goods is $500,000 per shipment
In teams of 2 (Sheehan and her Freight Forwarder)report on the following:
1.Conduct a CREEEPSS analysis for conducting business in Honduras.What are the major risks?
2.What are the total costs of each method of shipping?
a.Without the holding costs (opportunity of shipping)?
b.Including the opportunity cost of capital?
3.What criteria other than cost would you recommend she consider to decide the route/model decision?
4.Research the most appropriate routes that will be used in each case.Recommend the models the complete route(door-to-door).Justify your decision and outline the complete route on a map.
5.Which INCOterm would you recommend for Global,s shipments to Honduras,Why?(Completely justify your decision)
6.Outline the role her freight forwarder will play in the transactions and complete the necessary shipping documentation
Professionalism, style, organization and format