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Case 11.1 - Lighting Group
Logistics I (SCMT 310)
Southern Alberta Institute of Technology
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Case Study 11 – Lighting Group Case Study
Business Administration Students School of Business Southern Alberta Institute of Technology (SAIT)
Requested by Darren Anderson, SCMT310 Instructor
March 19, 2021
Source: Dittrich, B (2020). Red and white truckon road during daytime. Retrieved from unsplash/photos/mEbre97xyl
TABLE OF CONTENTS
- INTRODUCTION........................................................................................................................... LIST OF ILLUSTRATIONS.........................................................................................................
- STYLE A LAMP SHADE...............................................................................................................
- Number of Shades Per One Container.........................................................................................
- Total Cost of Transport from Warehouse to Port of Shanghai.....................................................
- STYLE B LAMP SHADE...............................................................................................................
- Number of Shades Per One Container.........................................................................................
- Total Cost of Transport from Warehouse to Port of Shanghai.....................................................
- STYLE C LAMP SHADE...............................................................................................................
- Number of Shades Per One Container.........................................................................................
- Total Cost of Transport from Warehouse to Port of Shanghai.....................................................
- TOTAL EXPECTED COST ANALYSIS......................................................................................
- SUGGESTED SHIPPING STRATEGY........................................................................................
- Pallets.........................................................................................................................................
- Shrink Wrap................................................................................................................................
- Slip Sheets..................................................................................................................................
- MITIGATION FOR PRODUCT FRAGILITY.............................................................................
- Proper Packing with Extra Paper or Foam Support...................................................................
- Eco-Friendly Wrapping..............................................................................................................
- Snug Packaging..........................................................................................................................
- Carton Box Strong Enough to Take the Unit Load....................................................................
- PERFORMANCE TESTING........................................................................................................
- Cushion Support Test.................................................................................................................
- Vibration Test.............................................................................................................................
- Load Test....................................................................................................................................
- Shock Test..................................................................................................................................
- Basic and Rough Handling Test.................................................................................................
- Temperature Test........................................................................................................................
- Table 1: Style A Pallet and Package Dimensions............................................................................ LIST OF ILLUSTRATIONS
- Table 2: Style A Pallet Orientation for Maximum Volume..............................................................
- Table 3: Style A Calculation of Number of Units in a Container....................................................
- Table 4: Style A Total Transportation Costs Calculation.................................................................
- Table 5: Style B Pallet and Package Dimensions............................................................................
- Table 6: Style B Pallet Orientation for Maximum Volume..............................................................
- Table 7: Style B Calculation of Number of Units in a Container....................................................
- Table 8: Style B Total Transportation Costs Calculation.................................................................
- Table 9: Style C Pallet and Package Dimensions............................................................................
- Table 10: Style C Pallet Orientation for Maximum Volume............................................................
- Table 11: Style C Calculation of Number of Units in a Container..................................................
- Table 12: Style C Total Transportation Costs Calculation...............................................................
- Table 13: Comparison of Total Expected Costs.............................................................................
- Figure 1: Cylindrical Versus Conical Lamp Shade........................................................................
- Figure 2: Packages on Pallet Picture..............................................................................................
- Figure 3: Shrink Wrapped Pallets..................................................................................................
- Figure 4: Eco-Friendly Paper Wrapping........................................................................................
- Figure 5: Horizontal Impact Tester................................................................................................
- Figure 6: Fragile Sign on Package.................................................................................................
INTRODUCTION
Let There Be Light Lamp Shade Company provides customed designed lamp shades in United States and Canada. The company was contracted by an architectural firm in People’s Republic of China to provide 8,100 units of identical lamp shades to be used in public buildings. Three prototypes of lamp shades were made. The dimensions of product, carton package, cost of manufacturing, variable, and transportation were determined. This report analyzes which prototype will have the lowest total expected cost and its recommended transportation considerations to Port of Shanghai.
STYLE A LAMP SHADE...............................................................................................................
Placed on a standard US pallet, the total number of packages per container is 1,512 packages with 1,512 units, assuming 21 pallets fit in one container. Total expected cost including transportation and products is $72,686.
Number of Shades Per One Container.........................................................................................
Table 5: Style B Pallet and Package Dimensions............................................................................
Dimensions Length Width Height Package (in) 12 12 12 Pallet (in) 48 40 72 Length Orientation 4 4 4 Width Orientation 3 3 3. Height Orientation 6 6 6 Rounded down 4 4 4 Rounded down 3 3 3 Rounded down 6 6 6
Table 2: Style A Pallet Orientation for Maximum Volume..............................................................
Combinations Calculations Units per Pallet 1 436 72 2 463 72 3 346 72 4 364 72 5 634 72 6 643 72
Transport cost from Vancouver to Port of Shanghai $800 dollars Total cost for all containers $4,800 dollars Total Transportation Cost without Insurance $13,200 dollars 2% Insurance for Transportation cost to Vancouver $1,194 dollars Total overall cost including insurance $72,686 dollars
STYLE B LAMP SHADE...............................................................................................................
Placed on a standard US pallet, the total number of packages per container is 504 packages with 3,024 units, assuming 21 pallets fit in one container. The total expected cost including transportation and products is $59,353.
Number of Shades Per One Container.........................................................................................
Table 9: Style C Pallet and Package Dimensions............................................................................
Dimensions Length Width Height Package (in) 12 12 40 Pallet (in) 48 40 72 Length Orientation 4 4 1. Width Orientation 3 3 3 1 Height Orientation 6 6 1. Rounded down 4 4 1 Rounded down 3 3 1 Rounded down 6 6 1
Table 6: Style B Pallet Orientation for Maximum Volume..............................................................
Combinations Calculations Units per Pallet 1 431 12 2 461 24 3 341 12 4 361 18 5 631 18 6 641 24
Table 3: Style A Calculation of Number of Units in a Container....................................................
Description Calculations Units Packages in one pallet 24 packages
Pallets in a container 21 pallets Packages in a container in 21 pallets 504 packages Total Units in a container 3024 units
Weight of 6 units including carton 62 lbs Weight of 1 pallet (wood) 40 lbs
Shipment weight limit per container 44,000 lbs Empty weight of 1 container 8,380 lbs Empty weight of 21 pallets 840 lbs Maximum weight of products 34,780 lbs Product weight with 3024 units 31,248 lbs Is total weight under limit? Yes Number of units per container 3,024 units
Total Cost of Transport from Warehouse to Port of Shanghai.....................................................
The cost of pallets, slip sheets, and extra packing materials are assumed and included in the calculation.
Table 4: Style A Total Transportation Costs Calculation.................................................................
Description Calculations Units Cost to manufacture 1 unit $4 dollars Cost of 1 carton package $2 cents Cost of 1 pallet $150 dollars Cost of slip sheets per container $20 dollars Cost of packing materials per 1 package $0 cents
Total units needed to be shipped 8100 units Total products, pallets, & materials cost for all units $51,691 dollars
Containers needed 2 containers Round up 3 containers
Transport cost for 1 container to Vancouver port $1,400 dollars Total cost for all containers $4,200 dollars Transport cost from Vancouver to Port of Shanghai $800 dollars Total cost for all containers $2,400 dollars Total Transportation Cost without Insurance $6,600 dollars 2% Insurance for Transportation cost to Vancouver $1,062 dollars
Weight of 10 units including carton 101 lbs Weight of 1 pallet (wood) 40 lbs
Shipment weight limit per container 44,000 lbs Empty weight of 1 container 8,380 lbs Empty weight of 21 pallets 840 lbs Maximum weight of products 34,780 lbs Product weight with 3780 units 38,178 lbs Is total weight under limit? No
Difference of weight over limit 3,398 lbs Number of packages that weighs 3398 lbs 33 packages Round down 33 packages Number of packages per container 345 packages Number of units per container 3,450 units
Total Cost of Transport from Warehouse to Port of Shanghai.....................................................
The cost of pallets, slip sheets, and extra packing materials are assumed and included in the calculation.
Table 8: Style B Total Transportation Costs Calculation.................................................................
Description Calculations Units Cost to manufacture 1 unit $5 dollars Cost of 1 carton package $2 cents Cost of 1 pallet $150 dollars Cost of slip sheets per container $20 dollars Cost of packing materials per 1 package $0 cents
Total units needed to be shipped 8100 units Total products, pallets, & materials cost for all units $53,815 dollars Containers needed 2 containers Round up 3 containers
Transport cost for 1 container to Vancouver port $1,400 dollars Total cost for all containers $4,200 dollars Transport cost from Vancouver to Port of Shanghai $800 dollars Total cost for all containers $2,400 dollars Total Transportation Cost without Insurance $6,600 dollars
2% Insurance for Transportation cost to Vancouver $1,104 dollars Total overall cost including insurance $61,519 dollars
TOTAL EXPECTED COST ANALYSIS
Figure 1 below shows a diagram of a conical (Style B and C) and cylindrical lamp shades (Style A).
Figure 1: Cylindrical Versus Conical Lamp Shade........................................................................
Table 13 below shows a comparison of the total expected cost of shipments. Style B has the lowest total expected cost. Let There Be Light Lamp Shade Company should choose style B lamp shade because of the lowest overall cost.
Table 13: Comparison of Total Expected Costs.............................................................................
Style Shipment Cost Transportation Cost Insurance Cost Total Cost Style A $58,292 $13,200 $1,194 $72, Style B $51,691 $6,600 $1,062 $59, Style C $53,815 $6,600 $1,104 $61,
SUGGESTED SHIPPING STRATEGY
Style B lamp shade package is 40 inches tall. Shipping considerations need to be accounted to minimize the risks of damaging packages, especially for large amount and tall shipments. The following are considerations the company should consider.
Sources: philschatz/calculus-book/resources/CNX_Calc_Figure_06_04_205.jpg [Online Image] image.lampsplus/is/image/V4325.fpx?qlt=75&wid=97&hei=150&fmt=jpeg [Online Image]
Figure 3: Shrink Wrapped Pallets..................................................................................................
Slip Sheets
When combined with pallets and shrink wraps, having a slip sheet on top of a pallet and under the packages adds extra stability on the shipment load and are highly suggested for highly fragile items. Receivers also have the option for material handling using a fork designed to receive packages on slip sheets. The figure below shows a picture of a slip sheet used in shipping.
Source: Atkinson, M. (2015). Shrink Wrapped Skids Waiting to Ship. Retrieved from flickr/photos/atkinsontshirt/20193447000/ [Online Image]
Source: Sapir Plastics Industries Ltd. (2012). Slip Sheets. Retrieved from sapirplastic/Products/Industrial-packaging/Slip-sheets.aspx [Online Image] Toyota Material Handling, (2021). SLIP SHEETS: GIVING PALLETS THE SLIP. Retrieved from toyotaforklift/blog/slip-sheets-giving-pallets-the-slip [Online Image]
MITIGATION FOR PRODUCT FRAGILITY
Products such as lamp shades are highly fragile, requiring support and protection to safely ship the item without any damages. The following are recommendations to mitigate the fragility of the material during shipment.
Proper Packing with Extra Paper or Foam Support
The following are general recommended steps for packing lamp shades (FreightCenter, Inc., 2021). Recyclable and reusable materials should be used.
- Load the base of the carton package with paper or foam support.
- Fill in any space with paper or foam support.
- Secure the lamp snug inside the carton box with enough paper or foam support.
Eco-Friendly Wrapping
All parts of the lamp shade should be covered with at least 1 inch thickness of cushion using environmentally friendly bubble wraps or paper. Once covered, the packages should be wrapped using marking tape. An example of an eco-friendly wrap is shown below.
Figure 4: Eco-Friendly Paper Wrapping........................................................................................
Snug Packaging
Snug packaging refers to not having any room of movement when packaging an item. Unwanted forces can start acting on a loose item inside a package and cause damages. This can be effective using plenty of material support to fill in space and wrapping.
Carton Box Strong Enough to Take the Unit Load
Since style B lamp shades are packaged with six cartons on top of each other, the company should source out a box strong enough to carry the required load. One style B lamp shade
Source: Core77, (2021). An Eco-Friendly Alternative to Bubble Wrap, 1: Easy-to-Dispense GreenWrap. Retrieved from core77/posts/91884/An-Eco-Friendly-Alternative-to-Bubble-Wrap-1- Easy-to-Dispense-GreenWrap [Online Image]
Figure 5: Horizontal Impact Tester................................................................................................
Basic and Rough Handling Test
Mimicking the worst possible scenario using a rough handling test on a package determines its stress points and weaknesses. It can also provide the company an opportunity to optimize its reliability before transportation.
Temperature Test
Exposing the lamp shades to multiple ranges of temperature ensures that it will not have an effect to its quality. Shipping by water can expose the products to moisture and may ruin the paint quality (Creopack Packing Intelligence, 2021).
LABELLING
Labelling is imperative, it gives warning, provides information, handling procedures, show symbols, and trademarks. Packages without enough labels or no labels at all are likely to be mishandled. There are certain requirement for labelling when shipping internationally. The following are labels that should be seen in shipping a fragile item:
Fragile sign in red “Handle with care” tape Manufacturer information Suggested handling procedure Product information
Source: Safe Load Testing Technologies, (2021). InnShock. Retrieved from safeloadtesting/project/horizontal-impact-tester/#:~:text=Shock%20tests %20determine%20the%20resistance,generating%20economic%20savings%20for%20companies.
Inspection reminder Shipping labels Trademarks Package position/orientation inside Shipping dimensions clearly labelled in Metric or Imperial units Disassembling instructions
Figure 6: Fragile Sign on Package.................................................................................................
INTERNATIONAL SHIPPING REGULATIONS
In Canada, there are international shipping rules and requirements that the company needs to be aware of as it may cost them extra if packages are shipped incorrectly. According to the Canada Post website, the most common foreign requirement is that it must not contain dangerous goods and prohibited products (Canada Post Corporation, 2015). Let There Be Light Lamp Shade Company should refer to Canada Post website for rules and regulations.
OBTAIN INSURANCE AND RECORD DOCUMENTATION
Obtaining shipping insurance protects the company for any damages, lost, and stolen packages. If there are any occurrences where items arrive at the destination damaged or were lost during transportation, the company should be paid for reimbursement equal to the total cost of the whole shipment. The risk of not obtaining insurance and covering out of pocket damage expenses can cost the company a large margin of their capital including inspection and investigations costs.
Source: Boys I., (2016). Fragile. Retrieved from flickr/photos/broadbottom/25087782875/ [Online Image]
REFERENCES
Atkinson, M. (2015). Shrink Wrapped Skids Waiting to Ship. Retrieved from flickr/photos/atkinsontshirt/20193447000/ [Online Image] Boys I., (2016). Fragile. Retrieved from flickr/photos/broadbottom/25087782875/ [Online Image] Canada Post Corporation, (2015). Customs Requirements. Retrieved from canadapost/tools/pg/manual/PGcustoms-e.asp Core77, (2021). An Eco-Friendly Alternative to Bubble Wrap, 1: Easy-to-Dispense GreenWrap. Retrieved from core77/posts/91884/An-Eco-Friendly-Alternative-to- Bubble-Wrap-1-Easy-to-Dispense-GreenWrap [Online Image] Creopack Packing Intelligence, (2021). Packaging Testing Service. Retrieved from creopack/en/packaging-solution/testing/ Dittrich, B (2020). Red and white truck on road during daytime. Retrieved from unsplash/photos/mEbre97xyl4 [Online Image] FreightCenter, Inc., (2021). How to Make Shipping Lamps Easy and Affordable. Retrieved from freightcenter/shipping/lamps Hughes Enterprises, (2021). Benefits and Uses of Shrink Wrap Equipment. Retrieved from hughesent/blog/benefits-and-uses-of-shrink-wrap-equipment/ Murphy, P., & Knemeyer, M. (2018). Contemporary Logistics. (12th Edition). Pearson Education, Inc. Safe Load Testing Technologies, (2021). InnShock. Retrieved from safeloadtesting/project/horizontal-impact-tester/#:~:text=Shock %20tests%20determine%20the%20resistance,generating%20economic%20savings %20for%20companies. Sapir Plastics Industries Ltd. (2012). Slip Sheets. Retrieved from sapirplastic/Products/Industrial-packaging/Slip-sheets.aspx [Online Image] Skyfreight Incorporated, (2012). Pallet-freight-shipping-denver. Retrieved from flickr/photos/denverdeliveryexperts/6942856094/ [Online Image]
Sofeast, (2021). What is a package vibration test?. Retrieved from sofeast/glossary/package-vibration-test/#:~:text=The%20package %20vibration%20test%20process&text=Start%20the%20test.,the%20export %20packaging%20for%20damage. Toyota Material Handling, (2021). SLIP SHEETS: GIVING PALLETS THE SLIP. Retrieved from toyotaforklift/blog/slip-sheets-giving-pallets-the-slip [Online Image]
Case 11.1 - Lighting Group
Course: Logistics I (SCMT 310)
University: Southern Alberta Institute of Technology
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