CASE SOLUTIONS

CASE 11-1 LET THERE BE LIGHT LAMP SHADE COMPANY

Question 1: How many Style A shades can be loaded into a 40-foot container?

The intermodal container holds 2,720 cubic feet, however, the top six inches are of no
use. The container will hold 2,560 Style A shades; Let There Be Light would need to use
four containers (8,100 shades divided by 2,560 shades per container) to transport the
Style A shades.

Question 2: How many Style B shades can be loaded into a 40-foot container?

Style B shades could be stacked two packages high with the square foot on the bottom.
Each column would hold 12 shades. There would be 8 x 40, or 320 columns of 12,
yielding 3,840 lamp shades, and would weigh less than 40,000 pounds. Let There Be
Light would need to use three containers (8,100 shades divided by 3,840 shades per
container) to transport the Style B shades.

Question 3: How many Style C shades can be loaded into a 40-foot container?

Style C shades could be stacked the same way as Style B and a container would hold 320
columns of 20, yielding 6,400 lamp shades. However, this would exceed the 44,000
pound weight limit. Each shade weighs 10.1 pounds; dividing that into 44,000 pounds
yields approximately 4,350 lamp shades; Let There Be Light would need to use two
containers (8,100 shades divided by 4,350 shades per container) to transport the Style C
shades.

Question 4: What are the total costs of delivering the Style A shades to the Port of
Shanghai?

Item Cost parameters Total cost

Shade manufacturing $4.00 x 8,100 $32,400
Packaging $.60 x 8,100 $4,860
Container drayage to 4 x $1,400 $5,600
Port of Vancouver
Insurance .02 x $42,860 $857.20
Ocean freight rates 4 x $800 $3,200

Total $46,917.20

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Question 5: What are the total costs of delivering the Style B shades to the Port of
Shanghai?

Item Cost parameters Total cost

Shade manufacturing $4.50 x 8,100 $36,450
Packaging $2.00 x 1,350 $2,700
Container drayage to 3 x $1,400 $4,200
Port of Vancouver
Insurance .02 x $43,350 $867
Ocean freight rates 3 x $800 $2,400

Total $46,617

Question 6: What are the total costs of delivering the style C shades to the Port of
Shanghai?

Item Cost parameters Total cost

Shade manufacturing $5.00 x 8,100 $40,500
Packaging $2.25 x 810 $1,822.50
Container drayage to 2 x $1,400 $2,800
Port of Vancouver
Insurance .02 x $45,122.50 $902.45
Ocean freight rates 2 x $800 $1,600

Total $47,624.95

Question 7: Which style would you recommend? Why?

From the relevant data, Style B is slightly less expensive than Style A.