“If they can’t be nested, they'll cost an arm and a leg t0 ship,” said Ms. Her- nande2, “and I doubt that we could price them competitively with all those ship. ping charges. What you should do is taper your wastebaskets so that when they're packed, one can be slipped inside another and so on. The tapering wouldn't affect the sil: screen pattems, which are the feature we want. T need price quotes, CIF, alongside ship, in Vancouver, B.C. Customs charges, if any, will be my problem, Machado agreed to make some cost calculations, and Ms. Hernandez said she had several days of business in nearby Hong Kong and would return to his of- fice on Thursday. She left, and Machado called Cameron Wong, an overseas freight forwarder with whom Machado did business, Machado explained the problem to Wong, and Machado also asked Henry Ng, his plant supervisor, © make some cost calculations regarding the manufacture of conical, rather than cylindcical, wastebaskets. ‘AL9:00 A.M. Wednesday they met, Ng explained that the machinery could be modified to cut and assemble wastebaskets with three different amounts of taper, and he referred to them as Styles A, B, and C. Production costs woutd differ be- cause of trim and fitting. For conventional, non-tapered wastebaskets, the costs of production are $10,000 for 10,000 units. (All cost figures inthis case are given in US. dollars.) For Style A, they would be $11,500 for the same number of units; Style B, $14,000, and Style C, $15,000. All could be silk-sereened. The conventional wastebaskets weigh 10 pounds each; Style A, nine pounds; Style B, nine pounds; and Style C, eight pounds, The amount of taper determined how many wrapped baskets could be placed inside each other. Shipping ‘volume, in ‘cubic feet per 100 wastebaskets; would be conventional, non-tapered,200 eubic™ fect; Style A, 150 cubic feet; Style B, 100 cubic feet; and Style C, 90 cubic feet. Note that styles A, B, and C attpered and nested inside each other wh shipped. — "Machado then turned to Wong and asked, “What about transport costs?” Wong replied, “There are several components. First, you have (0 get the packed wastebaskets from here to port. The best rate [can fis is from Joseph Wong, who will charge $50 per trip from your factory to the piet. His truck will carry 800 cubic feet each tip; in this instance we don't have to worry about ‘weight, The ocean freight rate on wastebaskets such as yours is $111.00 per ton (2,000 pounds) except that if they can get more revenue by considering every 40 cubic feet a ton, they charge you that way’ What do you mean?” asked Ng. “Ie’s called ‘vessel option’ and is intended to encourage denser cargo,” an- swered Wong. “All cargo given to the vessel is measured in both linear and weight measures, and if counting 40 cubic feet—or a cubic meter, which is about the same—as weighing 2,000 pounds, that’s what they will do. An old Votkswagen bus, fr example, might weigh only 3,000 pounds, bu it if occupies, say, 300 cubic feet, W's charged as though it weighed “re there other charges?” inquired Machado. “Only one,” answered Wong, “Insurance, Add your costs of production, de- livery to port, ocean transportation, and that is C & F. For CIF you have to add the costs of insurance from here to alongside ship in Vancouver. Right nox, in- surance charges are about one percent of C & F. Sorry I didn’t make all these exact calculations before coming, but | needed to hear what Ng had to say.” ‘Okay said Machado. “Now, l's figure out whether we can afford to taper 10,000 wastebaskets. Let's get some sharp pencils and go to work.” \® 1® \O ©.