Prepared for Scott Bennie - TMDT 1150 & James Peterson - COMM 2200 |
April 10, 2011 Tom (Zaiyi) Liu INTT 2A |
Our consulting firm has been hired to assist Lamp Place Incorporated (LPI) with a product roll out in Canada. LPI wants to test the viability of the Canadian market by introducing a Prestige line of lamps.
Previously, the lamps are being produced by an Indian supplier, who ships four containers of lamps (1,536 cartons) on a weekly basis to the Port of Halifax. After the arrival of these containers at the Port of Halifax, the lamps are then transferred to each of the LPI’s contracted distribution centres through rail and truck. The total cost of this whole process is $24,439 per week, or $1,270,815 per year.
Currently, a new supplier based in Montreal has been identified as a comparable alternative to the India supplier. The Montreal supplier offers the same product with $8.10 higher unit price. But the transportation costs are significant lower, as it only costs LPI $11,000 per week and $572,000 per year. One thing to note is that, the Montreal supplier uses a 53’ container to transport the product; therefore, there will be a possibility of 100 more lamps to be shipped with every container.
After an analysis both of the suppliers of their cost, convenience, environmental impact, and dependence of transportation modes, we have come to a recommendation for LPI to switch to the Montreal Supplier because:
* A saving of $698,815 in total transportation cost
* A saving in unit cost by $2.08
* More convenience when unloading products at distribution centres – pelletized
* More environmental friendly way of shipping – cartons made from recycled paper
* Faster and more flexible shipping methods – only truck
* Less affected by... [continues]
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