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Presentation/PPT
27/08/2022
Started in Madison, Wisconsin, after the student
unrest of the 1960s had died down, the Let There
Be Light Lamp Shade Company served an
upscale local market for many years. It designed
and built custom lamp shades and lamp globes. In
the mid-1980s, some architects who had once
studied under Frank Lloyd Wright in nearby
Spring Green were commissioned to design sev-
eral large public buildings in Asia. A total of 5,400
identical lights were to be installed, and the Let”
There Be Light Lamp Shade Company wished to
bid on the work. Terms of sale would include
delivery to the foreign port where the buyer
would take possession.
Transportation costs would be a hurdle. In
the initial design, the shades were cylinders that
were 11 inches high and 11 inches in diameter
and were packed into boxes that were 12 by 12
by 12 inches. (We refer to these shades as style
A.) The pac~~$es cost 60 cents each and
weighed 1 pound each. The shades cost $4 each
to manufacture. They weighed 9 pounds each
and 10 pounds packaged.
They would be shipped to the Port of
Oakland. The land rate to Oakland was $1,000
per 40-foot container, without regard to weight,
although the weight of the load could not
exceed 44,000 pounds per loaded container
because of highway weight restrictions. The
in terior dimensions of the intermodal con-
tainer were 8 feet wide by 8.5 feet high by
40 feet long.
Ocean rates from Oakland to the overseas
port were $22 per ton (2,000 pounds), except
that the ocean conference used a measurement
ton that indicated that for bulky loads every
40 cubic feet would equal 1 ton for rate-making
purposes. (That is, a shipment weighing, say, 130
pounds and occupying 80 cubic feet would cost
as though it weighed 4,000 pounds.) Insurance
costs were 2 percent of the value of the shipment
ready to be loaded aboard ship in Oakland.
(This is calculated as all of the company’s costs
up to this point.)
Because of the large size of the order, Let
There Be Light Lamp Shade Company realized
that it could custom design a shade that, rather
than being a cylinder, would be shaped like a
cone. The advantage to that was that the shades
could be nested. Some padding would be
required between the shades, but the nested
shades would also help protect each other.
However, cutting out material for conical
shapes results in waste, so production costs
would be higher. Two alternative cone-shaped
designs were proposed (referred to as styles B
and C).
Style B cost $5 per shade to manufacture
and could be shipped nested in packages of six.
The package dimensions were 12 by 12 by 48
inches, and when holding six shades, a package
weighed 62 pounds. Each package cost $2, and
this included padding between the shades.
Style C cost $6 per shade to make and
could be shipped nested in packages of 10. The
package dimensions were 12 by 12 by 50 inches,
and when holding 10 shades, a package
weighed 101 pounds. Each package cost $3,
including padding between the individual
shades.
1. How many style A shades can be loaded into an
intermodal container?
2. How many style B shades can be loaded into an
interrnodal container?
3. How many style C shades can be loaded into an
4. What are the total costs of delivering the style A
shades to the port of importation?
5. What are the total costs of delivering the style B
6. What are the total costs of delivering the style C
7. Which style would you recommend? Why?
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