Global sourcing wire harness decision case study solution

The international sourcing costs must be absorbed by Sheila, as the supplier does not assume any of the additional estimated costs and invoice Sheila later, or build the costs into a revised unit price. Sheila feels that the U.S. supplier is probably less expensive, even though it quoted a higher price.

Only two of the four suppliers indicated an interest in quoting the business: Original Wire (Auburn Hills, MI) and Happy Lucky Assemblies (HLA) of Guangdong Province, China. The estimated demand for the harnesses is 5,000 units a month.

The Global Sourcing Wire Harness Decision Case (pp. 817-818) Required 1. You have quotes from two suppliers of wiring harnesses. Assume that the horizon on this decision is three years. Calculate the Total Landed Cost per Unit for each of these suppliers.

Each monthly shipment requires three 40-foot containers. Packing costs for containerization = $2 per unit. Cost of inland transportation to port of export = $200 per container. Freight forwarder’s fee = $100 per shipment (letter of credit, documentation, etc.). Cost of ocean transport = $4,000 per container.