Question: Vibrant Video (V2) is a manufacturer of home theater projection systems
Vibrant Video (V2) is a manufacturer of home theater projection systems. The company assembles Ultra HD projectors in Portland, Oregon and sells them online and through specialty electronics stores. The most popular model retails for $4,995 and V2 bundles the projector with high fidelity audio components that are purchased from external suppliers.
Due to ongoing delivery challenges with their Pacific Rim suppliers and carriers, V2 has decided to buy from suppliers in closer proximity to Portland. The speakers will be supplied by an electronics company with operations in Tijuana, Mexico and the receivers will he purchased from an audio lab in Manchester, New Hampshire. The purchase contracts have been negotiated in principle. The speaker supplier has given V’ two shipping choices under FOB Destination, Freight Collect. The receiver supplier only sells its products FOB Origin, Freight Collect. The remaining issue for the W transportation director is to evaluate the delivery options that her analyst recommended for each product and make a decision.
Relevant information is provided in the following table:
CASE QUESTIONS
- What responsibilities, control, and costs does V2 bear under each of the FOB terms offered?
- What is the delivery cost and landed cost per unit for each speaker delivery option?
- Which delivery option do you recommend for the speakers?
- What is the delivery cost and landed cost per unit for each speaker delivery option?
- Which delivery option do you recommend for the speakers?
- What other supply chain issues and costs must SSE take into consideration when making these transportation decisions?
