The Oceania Dairy Company (ODC) is a New Zealand milk-processing company. Its plant near Timaru currently produces infant milk powder for the domestic market. Recently, ODC won its first international customer when a retailer in Singapore placed orders for 60,000 3-kilogram tins of milk powder to be delivered. ODC’s plan was to package the milk powder in tins at its plant and ship the tins by sea to Singapore. ODC’s production cost, before packaging and logistics, was $3 per kilogram. The existing tin design was cylindrical and measured 21 centimetres in diameter and 22 centimetres in height externally. Each tin cost $3 from a local packaging materials supplier and weighed 0.3 kilogram. Therefore, each tin that was filled with milk powder weighed 3.3 kilograms. These tins would have to be palletized and shrink-wrapped to withstand a sea journey, before being loaded into temperature-controlled shipping containers. Each wooden pallet (including shrink-wrapping materials) weighed 15 kilograms, cost $25. The internal dimensions of these containers were as follows: 2.28 meters wide by 2.12 meters high by 11.84 meters long. Each wooden pallet is loaded with 100 tins and shrink-wrapped. Each pallet after loading and shrink wrapped has following dimensions, 1.067 meters long, 1.067 meters wide, and 1 meter high. The loaded containers would be trucked from the processing plant to the Port of Timaru at a cost of $500 per container. The total shipment weight could not exceed 20,000 kilograms per container because of highway weight restrictions. Insurance costs were 3 percent of the value of the shipment ready to be loaded aboard ship in Timaru (that is, all of the company’s costs up to this point). The ocean freight cost from the Port of Timaru to any address in Singapore was $2,500 per container.

1.How many tins of milk powder can be loaded into a container under this plan?

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2.What are the total costs of delivering the milk powder to the Singapore under this plan?


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