Moon Beam Electronics Case Study

MGMT 5012 – Logistics and Supply Chain Management Case Studies

Case Study #1

Moonbeam Electronics: Profiting From a Foreign Trade Zone

Submitted to:

Prof. Victor Chu

Submitted by:

Abhijith Vijayakumar - 4256029

Harkirat Singh - 4256192

Jabir Cherapolikkal – 4256646

Nirmal Muthukattil – 4255681

Silen Stephen - 4256202

Moonbeam Electronics: Profiting From a Foreign Trade Zone

Moonbeam is a manufacturer of small electrical appliances. The assembly facility is located in Springfield, Southwest Missouri. The production is done by parts from foreign suppliers from countries like Japan, Taiwan, Korea and China. The strength of the employees is 400. Even though the labor cost is low in Mexico or Asia, the company does not have any plan to move their facility to a location where the production would cheaper. The production cost is moderate at the present location and the work force is also productive. 25% of their products are sold in Latin America, Europe and Asia. With new product designs and international marketing efforts they hope that their products can be made more popular.

1. Research Foreign Trade Zone and determine if Jim is correct in his assertions concerning the potential benefits

What constitutes a foreign trade zone (FTZ), the term generally refers to a specific location within a country that is officially designated for eligibility for tariff and tax exemptions with respect to the purchase or importation of raw materials, components or finished goods. Such materials and goods can generally be stored, processed or assembled in the FTZ for re-export (in which case taxes and duties generally would not apply) or for entry into the domestic market (in which case taxes and duties would be deferred until the time of entry).

Relief from inverted tariffs— there are levy (import duty) connections that penalize organizations for making their item in the United States. This happens when a part or raw material with...