or hold fractional units of a product and we have a projected annual demand (based on a 365 day year) of 33,500 units with a deviation in daily sales of 40 units. Our goal is to maintain an in-stock probability of 97% for our customers” replied Hazard. “All product (regardless of supplier) will be shipped by rail utilizing twenty-foot equivalent units (TEUs) to IDC’s distribution center in Alliance Fort Worth (AFW) where we will service all of IDC’s customer’s needs. A single TEU container can hold up to 1000 units of Schachtel Schmuggel Bannware. Due to the nature of the product, no other product may be loaded into the same container. IDC’s inventory carrying cost throughout the supply chain is 27.5%.” Hazard and Heskett recognize it will cost $200 to place each order with the domestic supplier and due to the complexity of international trade will cost $300 to place each order with the foreign supplier. Domestic Supplier Details One of the possible sources of supply is CousinsAg, located in Wahoo, Nebraska. The US Department of Labor reported that in 2002, 88,000 of Nebraska’s wage and salary workers are members of unions.4CousinsAg is a union shop with an average labor rate in their Wahoo, Nebraska facility of $25.30 per hour. In responding to IDC’s Request for Quote (RFQ), CousinsAg’s price is $88.00 per unit. Figure One Domestic Supply Chain As shown in Figure One, when an order is placed with CousinsAg it will take 8 days for them to process and manufacture the order, and an additional 5 days to ship it FOB Origin, Freight Collect to IDC’s Alliance Fort Worth Distribution Center. Rail shipping cost from CousinsAg to AFW is $2,100. Based on similar rail shipments from that part of the country, Hazard assumes the standard deviation of the lead time from Wahoo will be 3 days.