QUESTION #$2$ Total Cost Analysis

Now you have an idea of the competitiveness of Primo Caf$$s Vietnamese supplier and one of the Taiwanese suppliers for JDM$.$ So$,$ the next estimate is the total cost to ship product from Asia to the U$.$S$.$ You realize that this is a little tricky$$JDM$$s warehouse is in Palo Alto, close to the port of San Francisco, California. However, Primo Caf$$s warehouse is in Grand Rapids$-$ with intermodal $($rail and truck$)$ costs from Long Beach, California to Michigan.

Marco asks Frank where JDM$$s customers are located. Are most in the western U$.$S$.$ or nationwide? Frank digs up the customer list and finds that there are customers in most of the $48$ contiguous states. However, $90\%$ of its sales are in California, Oregon, Washington, Arizona and Nevada $($primarily Las Vegas$).$ You look up Primo Caf$$s Family Man sales by region... you find that $60\%$ of its sales are west of the Mississippi River. Would Primo Caf$$ save money if they used a regional warehouse model $($Palo Alto and Grand Rapids$)$ for Family Man? Below are the logistics costs from the Vietnamese supplier $($for simplicity$)$

to Palo Alto and Grand Rapids, using a weighted average customer base of Denver, Colorado for Family Man$$s western U$.$S$.$ sales:

Apply the total cost analysis framework presented in class $($Week $8)$ to complete the questions below. Complete all calculations in the excel file provided that you will upload with your exam.

$1.$ Given the assumptions above, what are the total costs for shipping Family Man product from the Vietnamese supplier to Denver, Colorado:

a$.$ Through the Palo Alto warehouse

b$.$ Through the Grand Rapids warehouse

$2.$ What additional information would you like to know?

$3.$ Is a regional warehouse model $($Palo Alto and Grand Rapids$)$ financially viable or should Primo Caf$$ continue to use its Grand Rapids warehouse for all U$.$S$.$ customers? Why?