1)

Chicago Price per Truck Cost ($)

Vessel charter 72,000
Load and block 40$/truck 40 2,000
Rail rate at 180$/truck 40 9,000
Wharfage 180 1,070
Loading and stowing 80$/truck 4000
Seaway tolls 54$/truck 2,700
Unloading 54 4,200
Insurance 210$/truck 210 10,500
Total 105,470

Baltimore Price per Truck Cost ($)

Load and Block 60 3,000
Rail Rate 896 44,800
Handling 200 10,000
Ocean Freight 1,440 72,000
Insurance 150 7,500
Total 137,000

2) I would recommend Baltimore, because it is the cost option the save costs and also
provides the faster transportation service. If we use charter vessel it would deliver/arrive
on 30th of May and company will receive payment. If case of Baltimore the trucks will
be sent two at (25#, 26#) the time and therefore will finish on 16th of April and reach
Doha at 8th of May and get paid. So, they will arrive 22 days earlier. Moreover, HDT
must pay 8% yearly interest rate and to calculate the savings for 25# and accordingly 26#
truck we must do the following:
(172000*0.08*22)/365 = $829.37
$829.37*50 = $41,468.50. Adding this to the costs of using Chicago vessel charter –
109470, we get the total costs of 146938.50. So, Baltimore is cheaper.
3) Price must contain company’s (HDT) daily cost, which should cover the finished
inventory and cost in investment. Transportation cost which we calculated above can
also be subtracted and terms and conditions of the sale should be stated, and it should
also specify the date of cargo arrival, pickup and payment. Furthermore, HDT should
exclude total cost of ocean freight being $72,000 and also the costs of loading and tolls.
Previous Insurance rate must be excluded and recalculated since we change sea freight.
The cost of insurance would be: $150*50 = $7,500 and total cost would be $17200 -
$79500 = $92,500. Now we get the total cost approximately $95,000 per truck,
considering raw resources and labor work coverage.
4) The HDT will not be responsible for unloading and instead, the buyer would be given
a responsibility to unload the railcars. All shipping costs will be excluded from total cost
expect rail rates. Labor, rail rate ($44,800) and raw materials must be included in new
terms and conditions of sale.