Question 2 1 pts In class we discussed the concept of Total Landed Cost, which i

Question

Question 2 1 pts In class we discussed the concept of Total Landed Cost, which is simply adding all the costs associated with acquiring and getting that product to market in a given distribution channel. (There are a couple of videos posted in CANVAS on this as well In figuring Total Landed Cost, we are concerned with the costs on a "per unit basis" and then we also look at how much each step in the supply chain adds to that unit cost the incremental cost added by each step in the supply chain. Consider the following example: Colnago USA manufactures high-end racing bicycles and is looking for a source of gear sprocket sets. Colnago USA would need 1,450 sets a month to meet demand. Channel A includes a domestic supplier while Channel B and Channel C include overseas suppliers. Cost information for each of the channels is as follows: Price Per Set Packing Cost per Set Total inland freight Total international transportation costs $300 $286 $273 $4.00$7.50$6.00 $600$1,000 $1,200 $5,500 $7,000

Explanation / Answer

Landed cost includes all cost incurred till it reached buyers door.that is purchase cost ,transportation cost,duties and taxes.

A)landed cost = purchase cost per set +packing cost per set +[frieght per unit

       = 300+4 +[600/1450]

         = 300+4+ .41

         = $ 304.41 per set

B)Total landed cost of channel B: 286+7.5+[1000+5500]/1450

          = 286+7.5 + 4.48

         = $ 297.98

c)Total landed cost per channe C: 273+6+[1200+7000]/1450

            = 273+ 6 + 5.66

           = $ 284.66

D)since the cost of channel C is lowest among all alternatives ,it is the most preferred channel

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