Case Assignment

CASE 11.1

Vibrant Video

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 be purchased from

an audio lab in Manchester, New Hampshire.

The purchase contracts have been negotiated in principle. The speaker supplier has given V2 two

shipping choices under FOB Destination, Freight Collect. The receiver supplier only sells its

products FOB Origin, Freight Collect. The remaining issue for the V2 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

1.What responsibilities, control, and costs does V2 bear under each of the FOB terms offered?

2.What is the delivery cost and landed cost per unit for each speaker delivery option?

3.Which delivery option do you recommend for the speakers?

CASE 11.1

4.What is the delivery cost and landed cost per unit for each speaker delivery option?

5.Which delivery option do you recommend for the speakers?

6.What other supply chain issues and costs must SSE take into consideration when making these

transportation decisions?

References

Langley; C. John Langley; Robert A. Novack; Brian Gibson; John J. Coyle (2016) Supply Chain

Management (12th Edition). Publisher: Cengage South-Western