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Intro to Business Logistics Management

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Intro to Business Logistics Management
Professor Mohammed Baki

Zhang Yuxin
104225453

2.09.2016
Introduction
This report is to analysis an appropriate price of a Bic pen. To plan on purchasing 10,000 Bic pens each year for total five years. Through analyzing the material, Mfg costs, labor costs, SG&A and packaging, transportation and profit of a Bic pen to get a reasonable price. Material
According to Lemon (2016), Bic pen is made of tungsten carbide ballpoint, Brass tip, link, polystyrene barrel and polypropylene cap and tube. To be more exact, the ballpoint is made of tungsten carbide which can be found the price is USD 60/Kilogram in the Alibaba website. To use the density of the material(15.63g/cm3)and the volume formula of ball(r=0.5mm),to get the weight of the ball is around 0.00817g, thereby we can get that the price of each ballpoint is 0.06USD. Secondly, the brass price is USD 8/kilogram, which can be found in Alibaba.com. The weight of each tip brass is 1.28g (Pen Modding, 2016), so the each price is 0.0102USD. Thirdly, due to the length of ink tube is 10.2cm, the internal diameter is 2mm and the density of ink is1.11 g/cm3. Therefore, the weight of the ink is approximately 0.36g, and the link cost is about 0.003USD for each pen. Fourthly, the polystyrene barrel for ink remains in the pen which cost USD 1800/metric ton. It is necessary to use the outer diameter (3mm), internal diameter (2mm) and density of the material (0.95 g/cm3) to get the weight of barrel is about 0.45g, thus, per barrel cost 0.00081USD. Finally, the weight of a Bic pen is 6g (Start Right Supplies, 2016), and then reduce the weight of the link, barrel, ballpoint and brass tip, we can get the weight of pen cap and tube(3.9g), so the price of cap and tube is around 0.00464 USD.
Mfg Costs
According to the Bic Half-Year Financial Report (2015, Bic’tween us, p26), it is easy to see the production machinery depreciation and amortization cost was 43,033,000 Euros (46,871,543USD). There are 34% parts for production stationery (46,871,543*0.34=15,936,324 USD) (BIC'tween us - N°5, 2015), so, the Mfg cost for per Bic pen was around 0.0036 USD in 2015
Labor Costs
Due to the labor cost was 303,132,000 Euros (329,989,495USD) (2015, Bic’tween us, p26). Meanwhile, 34% parts for production stationery (329,989,495*0.34=112,196,428 USD), therefore, for each Bic pen, labor cost was approximately 0.0256 USD in the year of 2015.
Overhead Costs
Based on the Bic Half-Year Financial Report (2015, Bic’tween us, p26), the other operating costs was 239,849,000 Euros (261,099,621USD), for the stationery part, there are 261,099,621*0.34=88,773,871 USD. Thus, the overhead costs of per Bic pen was 0.02024 USD in 2015.
SG&A Costs
As Bic Half-Year Financial Report (2015, Bic’tween us, p14) noted that the expense of SG&A was 114,717,000 Euros (12,483,503USD). Then, for the stationery part, it is easy to get the data: 12,483,503*0.34=4,244,391 USD. Therefore, for per pen was 0.00969 USD in 2015.
Package
According to the packaging shipping boxes price (0.01 USD/carton) which shows in Alibaba.com, then, 10,000 Bic pens needs about 167 boxes because there are 60 pens in one box. Thus, each Bic pen needs to be paid 0.00167 USD for packaging.
Transportation
We choose UPS shipping company for shipping the 10,000 from Mexico to Canada, and according to the charge standard of UPS, the transportation price is 645.95(UPS, 2016). Therefore, per Bic pen can cost about 0.0645 USD.
Profits
The price of Bic Round Stic ballpoint pens, Medium Tip, 1.0mm, Blue, 60/packs is 10.19CAD (7.194 USD) in the Staples online shop. Thereby, each Bic pen is 0.1199 USD.
Conclusion
After analyzing eight steps of the Bic pen, the cost of per Bic pen is approximately 0.32USD, so that we will buy totally 50,000 Bic pens among 5 years, which expense 0.32*50,000=16,000 USD.
Reference:
BIC’tween us. (2015, July 30, p14-26). 2015 HALF-YEAR FINANCIAL REPORT. Retrieved January 28, 2016.

BIC'tween us - N°5. (2015, p11). Retrieved January 28, 2016, from http://www.bicworld.com/BIC-Annual-Report-2014/#/12

The Ohio State University. Bic Cristal Pens. (n.d.). Retrieved January 28, 2016, from http://u.osu.edu/bicpens/02-raw-materials/

Pen Modding. (2011). Retrieved January 28, 2016, from http://thespyre.net/penmods/?p=2925

BIC Round Stic Pen - Start Right Supplies, School Supplies in Saskatchewan . (2016). Retrieved January 28, 2016, from http://www.startrightsupplies.ca/product/bic-round-stic-pen/

General Purpose Polystyrene, Virgin & Recycled GPPS Resin/ Granule. (n.d.). Retrieved January 28, 2016, from http://www.alibaba.com/product-detail/General-Purpose-Polystyrene-Virgin-Recycled-GPPS_60146946194.html?spm=a2700.7724838.0.0.vdniIP

Manufacturer supply all kinds of tungsten carbide. (n.d.). Retrieved January 28, 2016, from http://www.alibaba.com/product-detail/Manufacturer-supply-all-kinds-of-tungsten_1503118301.html?spm=a2700.7724838.30.9.7dQExO

Suppliers, Manufacturers, Exporters & Importers. (n.d.). Retrieved January 28, 2016, from http://www.alibaba.com/product-detail/C28000-brass-copper-strip_60305730129.html?spm=a2700.7724838.30.1.3WJUKZ

Polypropylene, Virgin / recycled PP granules, PP plastic raw material. (n.d.). Retrieved January 28, 2016, from http://www.alibaba.com/product-detail/Polypropylene-Virgin-recycled-PP-granules-PP_60088263940.html?spm=a2700.7724838.0.0.jGrAoO

3 Layers Packaging Book Shipping Boxes. (n.d.). Retrieved January 28, 2016, from http://www.alibaba.com/product-detail/3-Layers-Packaging-Book-Shipping-Boxes_60229170719.html?spm=a2700.7724838.30.116.BwKWpQ

Mexico. (n.d.). Retrieved January 28, 2016, from http://wwwapps.ups.com/calTimeCost?loc=en_MX

BIC® Round Stic® Ballpoint Pens, Medium Tip, 1.0mm, Blue, 60/Pack. (n.d.). Retrieved January 28, 2016, from http://www.staples.ca/en/BIC-Round-Stic-Ballpoint-Pens-Medium-Tip-1-0mm-Blue-60-Pack/product_31307_2-CA_1_20001…...

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