This document is available from our site and provided for your personal use only and may not be retransmitted or redistribute d without written permission from theCouncil of Supply Chain Management Professionals $($CSCMP$).$ You may not upload any of this site$$s material to any public server, online service, network, or bulletinboard without written permission from CSCMP$.$A Total Cost Approach to Understanding Supply Chain Risk$5$Figure Two: China$-$ AllianceTexas$$ Supply ChainThe China$-$ AllianceTexas$$ global supply chain is shown in Figure Two. When an orderis placed with Dong Hai Supply $($EXW Chengdu, China$)$ it will take $15$ days for them to process,manufacture, and stuff the order into a TEU container. Dong Hai Supply will use the InterfaceExporting Company $($IEC$)$ to ship the container FCA Long Beach. As a part of China$$s aggressivedevelopment in infrastructure, the high$-$speed Shanghai$-$Chengdu Railroad has recently beencompleted,$6$ and will take IEC $1$ days to move the container by rail from Chengdu to Shanghai.It will wait $4$ days at the Port of Shanghai waiting to be loaded onto a ship, $16$ days to cross thePacific Ocean to the Port of Long Beach, and $3$ days waiting to clear customs and be unloadedonto a dockside rail spur in Long Beach. IEC charges $12,414\mathrm{.}5$ for each TEU shipped. Importtariffs and duties are $$325$ per TEU are incurred at Long Beach U$.$S$.$ Customs and chargedseparately to IDC on a monthly basis. Once the shipment clears customs and is offloaded torailcar in Long Beach it will take an additional $4$ days to ship it FOB Origin Prepaid to IDC$$sAllianceTexas$$ Distribution Center. Rail shipping cost from Long Beach to AllianceTexas$$ is$$2,250$ per TEU. Based on similar mini$-$landbridge shipments from inland China, Hazardassumes the standard deviation of the shipping time will be $3\mathrm{.}45$ days.FREISING, GERMANY SUPPLIER DETAILSThe second international source of supply is Staberhofer Supply, located in Freising,Germany, just outside of Munich. The German transportation and logistics infrastructure arewell developed and supports trade throughout the European Union. Located $649$ kilometers

This document is available from our site and provided for your personal use only and may not be retransmitted or redistribute d without written permission from theCouncil of Supply Chain Management Professionals $($CSCMP$).$ You may not upload any of this site$$s material to any public server, online service, network, or bulletinboard without written permission from CSCMP$.$A Total Cost Approach to Understanding Supply Chain Risk$6$from the port of Rotterdam, wages in Freising have been strictly controlled by the GermanBundestag and Bundesrat to help stabilize the EU economy. The average labor rate in Freisingis $15\mathrm{.}68$ euros per hour. Assume the current exchange rate for use in this case is $1$ EUR Euro $()=1\mathrm{.}1735$ US Dollar. In responding to IDC$$s Request for Quote $($RFQ$),$ Staberhofer Supply$$s priceis $70\mathrm{.}53$ per unit.Figure Three: Freising$-$ AllianceTexas$$ Supply ChainThe Freising$-$ AllianceTexas$$ global supply chain is shown in Figure Three. When anorder is placed with Staberhofer Supply $($EXW Freising, Germany$)$ it will take $11$ days for themto process, manufacture, and stuff the order into a TEU container. Staberhofer Supply will usethe Engelhardt GmbH to ship the container FCA Jacksonville. It will take Engelhardt $1$ day tomove the container by rail from Freising to Rotterdam. It will wait $5$ days at the Port ofRotterdam waiting to be loaded onto a ship, $10$ days to cross the Atlantic Ocean to the Portof Jacksonville, and $3$ days waiting to clear customs and be unloaded onto a dockside rail spurin Jacksonville. Engelhardt charges $1,840$ for each TEU shipped. Import tariffs and duties are$$377$ per TEU are incurred at Jacksonville U$.$S$.$ Customs and charged separately to IDC on amonthly basis. Once the shipment clears customs and is offloaded to railcar in Jacksonville itwill take an additional $5$ days to ship it FOB Origin Prepaid to IDC$$s AllianceTexas$$ DistributionCenter. Rail shipping cost from Jacksonville to AllianceTexas$$ is $$2,720$ per TEU. Based onsimilar mini$-$landbridge shipments from inland Europe, Hazard assumes the standarddeviation of the shipping time will be $2\mathrm{.}9$ days.

This document is available from our site and provided for your personal use only and may not be retransmitted or redistribute d without written permission from theCouncil of Supply Chain Management Professionals $($CSCMP$).$ You may not upload any of this site$$s material to any public server, online service, network, or bulletinboard without written permission from CSCMP$.$A Total Cost Approach to Understanding Supply Chain Risk$7$Faced with this information Heskett has asked Hazard the following questions.QUESTIONS:Q$1$: Using the exchange rates cited in the case, what is the INITIAL PURCHASE COSTPER UNIT $($in US Dollars; do not include transportation costs$)$ paid to:a$.$ Dong Hai Supply in Chengdu, China?b$.$ CousinsAg in Wahoo, Nebraska?c$.$ Staberhofer Supply in Freising, Germany?Q$2$: What