Question

In: Operations Management

Case: Overshipped & Short-shipped China's Company A imported wheat from a foreign company. It was contracted...

Case: Overshipped & Short-shipped
China's Company A imported wheat from a foreign company. It was contracted "Quantity: 2,000,000 M/T, USD 100 per M/T FOB ..." But the foreign company shipped 2,300,000 M/T.
Question:
(1) How to deal with the over-shipped goods?
(2) What if the foreign company only shipped 1,800,000 M/T?

Solutions

Expert Solution

1. The company A must be levied additional charges for the extra 300,000 M/T of the wheat that is being imported from a foreign company. The reason being, the China's Company A must have ensured the foreign company exports the quantity mentioned in the contract i.e. 2,000,000 M/T for which it sought permission from the import officials. Thus, it was the responsibility of Company A to ensure abiding to the contract. The Company A in return may levy additional penalty charges to the foreign company for having broken the contract terms and conditions.

2. In the second case, the China's Company A must pay the foreign company for only the amount of wheat received. i.e. it receives 1,800,000 M/T. Thus, it must not pay for the remaining 200,000M/T. Also, if the contract mentions any partial delivery penalty, the same may also be applied in this case. Thus, the Company A must pay $100 x 1,800,000 = $180,000,000 minus any penalties for partial delivery to the foreign company.


Related Solutions

During the 1950s, the United States imported wool from Great Britain, exporting wheat, while Great Britain...
During the 1950s, the United States imported wool from Great Britain, exporting wheat, while Great Britain imported wheat from the United States, exporting wool. In 1957 Hungarian-American economist Bela Balassa compared the production of wool and wheat in the United States and Great Britain. For both of these products, Balassa found that the United States could produce a larger amount of output than Great Britain. Some American politicians used this result to argue that there was no gain to the...
A company enters into a short futures contract to sell 5000 bushels of wheat for 450...
A company enters into a short futures contract to sell 5000 bushels of wheat for 450 cents per bushel. The initial margin is $ 3000 and the maintenance margin is $2000. What price change would lead to a margin call? Under what circumstances could 1,500 be with drawn from the margin account? Please provide formulas thank you
Case study 4: Belgium Mills Company SAOG (the Company) is engaged in the milling of wheat...
Case study 4: Belgium Mills Company SAOG (the Company) is engaged in the milling of wheat flour, bran and feed and distributing premium quality wheat products to the Oman market as well as export to African and other neighboring countries. The Company is also involved in production and sale of macaroni, pasta and related food products. Furthermore, it is involved in production and sale of propylene bags. The Company's commercial operation commenced on 1 January 1998. The total revenues reached...
You (US company) imported Earth Moving Equipment (EME) from Australia. You imported EME at US$ 300...
You (US company) imported Earth Moving Equipment (EME) from Australia. You imported EME at US$ 300 (with Cash) on Dec 1, 2018. On Dec 15, 2018, you sold EME to Australia at A$400 (Australian $) in AR. The exchange rate on Dec 15, 2018 was 2 A$/US$. The exchange rate on Dec 31, 2018 was 4 A$/US$. On Feb 1, 2019, your customer paid you in full. The exchange rate on Feb 1 was 1 A$/US$. What were NI in...
A company is shipped computers. The company randomly tests 10 computers from each shipment (with replacement)....
A company is shipped computers. The company randomly tests 10 computers from each shipment (with replacement). If at most 1 computer is defective in the sample, the company accepts the shipment. The manufacturer sends 4184 computers with a known 2.61% rate of defective computers. What is the probability accurate to 6 decimal places that the shipment is rejected?
A company enters into a short futures contract to sell 5,000 bushels of wheat for 250 cents per bushel.
a) A company enters into a short futures contract to sell 5,000 bushels of wheat for 250 cents per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. What price change would lead to a margin call?b) How does the cost-of-carry argument for commodity futures differ from futures written on other classes on assets? How would you explain differences in the sign and magnitude of the basis across different classes of commodities?
On December 15, 2018, a US company imported 400,000 barrels of oil from a country in...
On December 15, 2018, a US company imported 400,000 barrels of oil from a country in the Europe. The US company agreed to pay 40,000,000 euros on February 15, 2019. To reduce the risk of loss due to exchange rates, the company entered into a forward contract to buy 40,000,000 euros on February 15 at the forward rate of $.0269. Direct exchange rates on various dates were:                                          Spot Rate          Forward Rate 2/15 Delivery December 15, 2018        $.0239 $.0269...
Beta Company sells blouses in Washington, USA. Blouses are imported from Pakistan and are sold to...
Beta Company sells blouses in Washington, USA. Blouses are imported from Pakistan and are sold to customers in Washington at a profit. Salespersons are paid basic salary plus a decent commission of $5 on each sale made by them. Selling price and expense data is given below: Selling price per blouse                                  $          73.00 Variable expenses per blouse:             Invoice cost                                         $          25.00             Sales commission                               $          5.00 Total Variable Expense:                                 $          $31.00 Annual fixed expenses:             Rent                                                    $          $100,000...
Identify a failed case of a foreign company which is UBER that operating in Thailand. why...
Identify a failed case of a foreign company which is UBER that operating in Thailand. why it failed. (Long-essay) Included with a) Background of this foreign firm; b) Description of this foreign firm's business in Thailand. c) Detailed analysis on the reasons why this firm failed. You'd better identify the specific reasons for this failure, such as poor market research, poor partnership; etc. d) Conclusion part: You can summarize lessons that other foreign firms can learn from this case.
After reading the case that is below, How can a foreign company entering China ensure that...
After reading the case that is below, How can a foreign company entering China ensure that it tackles the most important “little” things that end up being huge barriers to success as we approach the year 2020 when China is expected to have significantly increased purchasing power among its middle class?​ Write your opinion, as a manager, on how to face cultural issues like those described in the case, when entering foreign markets. The People's Republic of China opened up...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT