Important Note : We can take any assumptions actually the case is based on assum
ID: 420252 • Letter: I
Question
Important Note : We can take any assumptions actually the case is based on assumptions and create the nalysis for the same
After reading the case
1 Show in India Map Where would be our warehouse ? How the products will be serviced satisfying all the constrants given
2 How much stock you would be holding across India
3 What would be the logistic model
4 What would be the Import Cost
5 What would be the Logistic Cost
6 What would be the warehouse cost
7 What would be the inventory cost
8 What is the overall supply chain cost
9 Price for each product to satisfy a gross margin of 30 %
Strategic Direction: Hesol Inc. had the last board meeting a week before strategic directions for the India Business start up: and finalized the following key No local manufacturing in India Products will be imported from China and distributed in India Products will be sold at all Tier 1 and Tier 2 Cities of India only All Hesol Products would be sold through Online only Product Details: 1. Distribution of orders (demand) between Tier 1 and Tier 2 is 40:60 2. The orders (demand) can be considered evenly distributed within each cty in Tier 1 and Tier 2Explanation / Answer
1.
This is one of most typical and critical part to start any import division. Our warehouse should be in a location so that we can manage to deliver the material in 1 day in 1tire city or within 5days in tire 2 city. For best of my knowledge I would prefer 3 warehouses one is to cover the entire tire 1 and tire 2 city of North side (Delhi-NCR) and one warehouse in the south region (Chennai) so that south city pressure can be handled and one is for West side (Mumbai).
2 How much stock you would be holding across India.
As the monthly demand of HESO is 600000, HESL is 100000, ESOL is 150000.
My model for holding stock should be optimum and follow the JIT function, where need can be fulfilled just in time. My inventory model for stock should be 14days to 21days considering 4weeks as a shipment time to the warehouses. It means If any of the robust situation occur we will able to handle the situation for at least 3weeks.
Initially equal amount of demand distributed across all the warehouses later on check the where the demand of the product high.
3 What would be the logistic model.
FOB China (where supplier located)
Major shipment will done through sea only, then for Delhi using road or rail transport for the distribution.
We has establish some other wholesaling or retailing division, who can handle our distribution for tire 1 and tire 2 city.
Logistic Model From China to India
SEAà RAILà ROAD
4 What would be the Import Cost.
As it is not clear from the product description the type of product and applicable duty on it, so on the bases of range of duty applicable mentioning the landed cost.
Unit Price in USD
Freight
CVD
AED
Insurance
Other Exp
6%
15%
4%
0.10%
5%
Landed Cost Per Unit
HESO
10
0.6
11.5
11.96
11.97196
12.57056
13.170558
HESL
15
0.9
17.25
17.94
17.95794
18.85584
19.755837
ESOL
12
0.72
13.8
14.352
14.36635
15.08467
15.8046696
Unit Price in USD
Freight
CVD
AED
Insurance
Other Exp
6%
15%
4%
0.10%
5%
Landed Cost Per Unit
HESO
10
0.6
11.5
11.96
11.97196
12.57056
13.170558
HESL
15
0.9
17.25
17.94
17.95794
18.85584
19.755837
ESOL
12
0.72
13.8
14.352
14.36635
15.08467
15.8046696