Question

Pls answer all parts forUpvote

Sound-Around Turntables (SAT) is aregional manufacturer of high fidelity turntables. It has been inbusiness in Detroit, Michigan since 2008 and has steadily increasedsales volume as U.S. sales of vinyl albums re-ignited.

Robert Ritchie, CEO for SAT received anorder for 2,500 turntables for Best Buy, a national electronicsretailer. Production for this order will begin in late March andthe customer order must be delivered on June 1. Since SAT builds toorder, Ritchie needs to begin ordering parts from his global supplybase soon.

An important needed component is theturntable motor that is normally purchased from Dongguan Electric.The supplier is located in Kaohsiung City, Taiwan. The product ishigh quality and SAT has worked with Dongguan for 7 years. Allunits in the order would be shipped at one time. However, thecompany recently raised its prices citing higher material costs dueto rising tariffs.

Last week, Ritchie received a proposalfrom an Argentinian company that wants to become a supplier to SAT.Maduro Motors promises to make monthly deliveries of 500 unitsstarting on December 15. Ritchie likes the idea of reducing thesupplier-to-factory distance and receiving monthly deliveries.However, Ritchie doesn’t know much about this supplier or thepolitical environment in Argentina.

The Options

Dongguan Electric currently sells the20W synchronous motor to SAT for 825 TWD per unit. Order cycle timeis 46 days. Terms are listed as DAT, Chicago Tradeport.

Maduro Motor proposes to sell a similar20W electric motor to SAT for 875 ARS per unit. Order cycle time is18 days. Terms are listed as FAS, Port of Mar del Plata.

	Dongguan	Maduro
Price Per Unit	825 TWD	875 ARS
Estimated Ocean Shipping Cost per unit	140 TWD	78 ARS
Estimated US Customs duty per unit	39 TWD	12 ARS

Exchange Rates

Date	Taiwan New Dollar (TWD)	Argentine Peso (ARS)
January 11, 201x	30.75	29.88

Answer the following questions:

1. Evaluate the selling price and related costs per unit offeredby each supplier in US dollars.

	Dongguan	Maduro
Price Per Unit	$	$
Estimated Ocean Shipping Cost per unit	$	$
Estimated US Customs duty per unit	$	$

2 a. What costs, responsibilities and risks are assumed by thebuyer (SAT) and the seller (Dongguan Electric) under Incoterms2010, DAT, Chicago Tradeport?

b. What costs, responsibilities and risks are assumed by thebuyer (SAT) and the seller (Maduro Motor) under Incoterms 2010,FAS, Port of Mar del Plata?

	DAT, Chicago Tradeport	FAS, Port of Mar del Plata
Packaging goods for export and loading thecontainer
Factory to port transportation
Payment of export duties (if any are due)
Loading the container on the ship
Paying for the ocean transport (carriagecharges)
Paying for the insurance on the internationalvoyage
Paying destination terminal charges for unloadingfreight
Clearing US Customs (pay import duties &taxes)
US transportation to final destination

3. Given your responses to Questions 1 and 2, what is the totalknown cost per motor that SAT will incur and what other costs willSAT incur?

	Dongguan	Maduro
Costs from Q1 paid by SAT	$	$
Costs from Q2 that SAT will incur
Which supplier do you believe will provide the lowesttotal cost per unit?	□ Dongguan	□ Maduro

4. What other costs and factors would you consider during thesupplier selection process?

5. Which global supplier would you select? Why?