question archive 3D Printers for the Masses Bobby Cook is trying to capture the attention of Black Friday shoppers for OptiShop, a discount chain with 1,500 stores in Canada and the United States

3D Printers for the Masses Bobby Cook is trying to capture the attention of Black Friday shoppers for OptiShop, a discount chain with 1,500 stores in Canada and the United States

Subject:ManagementPrice: Bought3

3D Printers for the Masses
Bobby Cook is trying to capture the attention of Black Friday shoppers for OptiShop,
a discount chain with 1,500 stores in Canada and the United States. Bobby wants to offer
a tabletop 3D printer at a price point of $299 that rivals more expensive options from Dell
and Flashforge. He believes that it will be possible to sell 150,000 units during the holiday
season and 15,000 units per month over the subsequent 12 months.
After much effort to ensure feasibility of the initiative, evaluate product quality, and
compare supplier capabilities, Bobby has narrowed his focus to three options. Each supplier
offers a reasonably priced, high-quality home 3D printer that meets OptiShop specifications.
However, each supplier is in a different country, which gives Bobby some concerns about
delivery costs, risks, and foreign exchange rate exposure. Highlights of each proposal are
provided below.
Option 1—purchase printers from Takena Electronics in Nagano, Japan, a longtime
supplier of products to OptiShop. Takena works on an open account basis and promises to
make shipments of 2,500 units in 40-foot containers under terms Incoterm DAP, Port of
Long Beach. The price offered per unit is 19,000 JPY (Japanese Yen).
Option 2—purchase the printers from TriTex Industries, a Kuala Lumpur, Malaysia-based
manufacturer. TriTex has a solid reputation and Bobby nearly purchased virtual reality
goggles from them last year. Their offer is based on 1,300 units shipments in 20-foot containers
under Incoterm FOB, Port of Tanjung Pelepas. The price offered is 727 MYR (Malaysian
Ringgit) using Letter of Credit payments.
Option 3—purchase the printers from Luca Enterprises, an electronics distributor in
Bucharest, Romania. Luca sources printers from contract manufacturers in Eastern Europe.
Their offer is based on OptiShop taking control of the product at the Luca distribution center
under Incoterm EXW. The price offered is 625 RON (Romanian Leu), cash in advance.
As Bobby considered his options, he consulted an online currency converter to evaluate
the quotes. He found the following exchange rates:
1 USD = 110.20 JPY 1 USD = 64.12 MYR 1 USD = 3.86 RON
CASE QUESTIONS
1. What is the price per 3D printer in USD for the Takena Electronics offer? What costs,
responsibilities, and risks does OptiShop assume under DAP, Port of Long Beach?
2. What is the price per 3D printer in USD for the TriTex Industries offer? What costs,
responsibilities, and risks does OptiShop assume under FOB, Port of Tanjung Pelepas?
3. What is the price per 3D printer in USD for the Luca Enterprises offer? What costs,
responsibilities, and risks does OptiShop assume under EXW, Bucharest?
4. What other issues and transportation costs must Bobby consider to make an effective
supplier selection?
5. Which of the three options would you recommend? Why?

 

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