3D Printers for the Masses Bobby Cook is trying to capture the attention of Black Friday shoppers…

3D Printers for the Masses

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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, Malaysiabased 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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