Module 6 GRASP Logistics and Supply Chain Management Project (1)-Vatandeep
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MATH-1078: G.R.A.S.P. MODULE 6
LOGISTICS & SUPPLY CHAIN MANAGEMENT TEMPLATES
NAMES: Vattenpreet Kaur, Yara Marouf Ali, Navdeep Kaur
Part 1: Original Situation
Task
Your Product Initially
Product Selection
Product Selected:
Smart Watch Fitness Tracker Blood Pressure Heart Rate Men Women Sport Bluetooth
Name of Currency and Where Product is Located:
In British pound (GBP) and located in Weston Super Mare, United Kingdom. Unit Price:
GBP 9.85
Unit Shipping Price:
GBP 17.48
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Mid-Rate Exchange Rate
Exchange Rate: 1.1249377
Date/Time: November 22, 2022, at 4:17 PM CST
Your Bank’s Exchange Rate
Bank Exchange Rate
Mid-Term: 1.1249377 Sell Rate: 1.29%
=1.1249377 x (1+0.0129)
=1.1249377 x 1.0129
= 1.1394493963
The exchange rate at the bank is 1.1394493963
Bank Exchange Rate Mid-Term: 1.1249377 Buy Rate: 1.16%
= 1.1249377 x (1+0.0116)
= 1.1249377 x 1.0116
= 1.1379869773
The exchange rate at the bank is 1.1379869773
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Translation
from Foreign to Local Currency Amounts
Product
GBP $9.85 x 1.1394493963 = CAD $11.22
CAD $11.22 x 100000 = CAD $1122000
Shipping
GBP $88.04 x 1.1394493963 = CAD $100.32
CAD $ 100.32x 100000 = 10032000
Part 2: Currency Fluctuation
Task
Your Product at least 3 business days later
New Exchange Rate
Exchange Rate: 1.1089379 Date/Time: November 25, 2022, at 9.22 AM CST
Your Bank’s
Exchange Rate
Bank Exchange Rate Midterm: 1.1089379 Sell Rate: 1.29%
Exchange Rate = Midterm + bank’s sell rate =1.1089379(1+0.0129)
=1.1089379 x 1.0129
=1.1232432
The Exchange rate at the bank is
1.1232432
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Bank Exchange rate
Midterm: 1.1089379 Buy Rate:1.16%
Exchange rate = midterm + bank’s buy rate =1.1089379 x (1+0.0116)
=1.1089379 x 1.0116
=1.12180158
The Exchange rate at the bank is 1.12180158
Translation from Foreign to Local Currency Amounts
Product
:
GBP can be converted into Canadian dollars by multiplying the GBP amount with the bank’s exchange rate. Hence,
GBP: $9.85 x 1.1232432 = CAD $ 11.06
CAD$ 11.06 X 100000 = CAD $ 1106000
Shipping:
GBP $ 88.04 X 1.1232432 = CAD $ 98.89
CAD $ 98.89 X 100000 = CAD $ 9889000
Commentary
The exchange rate changed from 1.1249377 Australian dollars to 1.1089379 in three business days. The difference noticed is 0.0159998. The exchange rate decreases. The drop in the currency could be due to various reasons such as the global recession and increasing demand for the currency. There could be various other reasons for this such as economic fundamentals. Another factor could be
inflation in the country. Moreover, inflation is related to the interest rates and thus they can impact the exchange rate of the country.
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The exchange rate has dropped now and hence it would be beneficial for us because now less money is required to convert the currency.
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Part 3: Ship and Pay
Task
Your Product
Distributi
on and Time
We have chosen FedEx for the shipping of our product from the United Kingdom to Canada. The shipping will arrive between 10 to 12 days. The cost of the shipping is £88.04 which includes one container, and it will take place through ocean freight. Calculate Shipping Rates | FedEx Canada
According to the information provided on the website, the cost of shipping which
is £88.04 for one unit will be multiplied by 100000 units to get the shipping cost of the required units.
88.04 x 100000
= £ 8,804,000 (shipping cost)
Now, the company provided a 95% discount on shipping costs, which is
8,804,000 x 0.95
= 8,363,800
After applying the discount, we just need to pay 5% of the total cost.
8,804,000 – 8,363,800
= £440,200
This is the total shipping cost we are going to pay to FedEx.
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Actual Invoice with Terms of Payment
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Justify Your Terms of Payment
Term of payment made by our company are 5/10, 2/20, n/30
According to this if the payment is made in 10 days, then there will be a 5% discount and if payment is made within 20 days there will be a 2% discount. While there will be no discount for the payment made in 30 days. Apart from that, there are 1.5% penalty fees on late payments.
Moreover, it is acceptable to ask for payment as the shipping costs must be paid by the supplier and the product being delivered would need to be covered cost-
wise.
Scenario 1
Payment of Invoice
Payment is made within the discount period. This ensures that the company is free from making any future payment for the product they received and, they will
get a 5% discount. 985000 x (1 – 0.05) GBP = 935750
After applying the discount, a significant amount is taken from the total cost. If the company will resell this product in the future, then we end up having good revenue from the sales. Whereas it totally depends on the company whether they want to pay this amount
or not. It can be based on that how much money they currently have, or whether they are in any kind of debt. Moreover, their ability to sell this product and make
a profit from the sales will make a huge difference in their revenue. Scenario 2
Payment of Invoice
The first payment has been made within the discount period but in 15 days due to
which the company gets a 2% discount instead of 5%. And the rest of the payment will be considered as the balance amount. So, the company decided to pay £1000,000 in the first payment.
1,000,000 / (1-0.02) = 1,000,000 / 0.98
GBP = 1020408.16
This is the total amount which is company going to pay during the period of 15 days with a 2% discount on it. The remaining GBP 425,200 balance must be paid
before the due date to avoid any late charges. The money, they have saved gave an impact on reducing the cost of goods sold. Moreover, the gross margin profit is increased slightly from the reduced variable cost per unit. Due to this company
can use the leftover money for other operating expenses and can invest in different deals.
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Scenario 3
Payment of Invoice
In this scenario, if customers do not make any half or full payment during the discount period and make payment after the due date from the invoice then, they will be charged a 1.5% penalty fee. 1,425,200 x 0.015
GBP = 21,378
This is the penalty fee that is going to pay if the company exceeded the due date plus the total bill amount including product cost or shipping charges.
On the other hand, if the company makes half the payment in the discount period
and half after the due date of the invoice, then there will be penalty charges of 1.5% of the payment which is left.
425,200 x 0.015
= GBP 6,378
Total paid with a penalty 425200 + 6378 = 431578
This amount will be needed to be paid with the amount which left or exceeded the time limit. There will be a reduction in profit margin due to the late penalties.
. Penalties will be imposed on late payers and those who lose the discount. Profit will decrease or even incur losses as a result of higher costs. https://www.xe.com/currencyconverter/
Calculate Shipping Rates | FedEx Canada
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