questions 1,2,3 and steps explained

CASE STUDY Selecting Transportation Modes for China Imports Jackie Chon, vice president of China Imports, was look times cheaper than air freight. Ocean shipprag, however ing to design a framework to select transportation modes took longer and was less reliable. The average lead time for various products imported from China to the United using ocean shipping was nine weeks, with a candor States. His basic options were to either use air freight or deviation of three weeks. ocean shipping in 20-foot containers. Air freight was faster and more reliable, but ocean shipping was much Product Characteristics cheaper. He decided to evaluate the shipping decision for two very different product categories-consumer Weekly demand for smartphones averaged 1.000 and electronics, such as smartphones, and decorative hard- had a standard deviation of 400, Each smartphone cost ware. such as door handles and hinges. $300 and weighed 0.1 kg. The typical life cycle for a China Imports provided a variety of products to its smartphone was about one year, it was critical to not inge customers from a warehouse near the port of Long demand early in the life cycle because of a lack of pad Beach, California. The company incurred a holding cost uct availability. Weekly demand for decorative hardware of 25 percent on all inventory held and aimed to provide averaged 5.000, with a standard deviation of 1,060. Each a 98 percent cycle service level on its products. The high unit of decorative hardware cost $20 and weighed 1 ky level of service aligned with the high quality of products Decorative hardware tended to have a long life cycle- the company was still selling door handles and hinges that the company imported. that were introduced more than a decade earlier Transportation Options from China Study Questions Air freight and ocean shipping were the two options 1. What is the annual cost of using air freight to impos available to move product from China to the United smartphones? What is the annual cost of using ocean ship States. Air freight charged $10 per kilogram shipped and ping to import smartphones? required a minimum shipment of 50 kg. Besides being 2. What is the annual cost of using air freight to impon dec fast, air freight was also quite reliable. The average lead rative hardware? What is the annual cost of using ocean time on air freight was one week, with a standard devia- shipping to import decorative hardware? 3. What other factors should be considered in the choice of tion of lead time of 0.2 weeks, Ocean shipping was much transportation made? What mode would you recommend cheaper and cost $1,200 per 20-foot container. Given for each product? Suggest a general framework that Jackie that each container could hold up to 15,000 kg, the ship- can use across all product categories. ping cost per kilo by ocean was more than a hundred