Questions

1)

What channels does Timbuk2 sell through and which one is the most profitable? What are some of

2)

How should Timbuk2 go about deciding which options to offer customers in the e-commerce channe

3)

Estimate the cost of manufacturing a bag in San Francisco and the cost of producing a bag in China

4)

Should Timbuk2 pursue the option of manufacturing in China? If so, what challenges are they likely

ofitable? What are some of the pros and cons of Timbuk2s Build your own channel (i.e., its e-commerce channel)?

s in the e-commerce channel? In other words, what general principles or analysis could be used to deepen their understanding
of producing a bag in China.

at challenges are they likely to face and what changes will they need to make? In particular, think about the utilization of the San

merce channel)?

deepen their understanding of the appropriate choices? You may want to consider several of the options mentioned (an added

out the utilization of the San Francisco factory before and after outsourcing as well as about inventory needs.

tions mentioned (an added handle, different color logos, different size panels, etc.)

What channels does Timbuk2 sell through and which one is the most profitable? What are some of

According to Table 1, Timbuk2 sells through Domestic, International, eCommerce, Corporat

Some Pros and Cons of Timbuk2's eCommerce channel

Pros
Customers can pick and choose from 12 or 16 different colors
Customers
have
a standard
logo
stiched screen
on for free
a custom colored
one forc
see the bagcan
they
wereeither
configuring
on the
computer
and or
experiment
with different
and options.
Bags Ordered via their eCommerce channel are given a higher priority than bags in other c

Cons
More Labor is required to fill orders for eCommerce along side traditional channels.
More Material is required because of the customized bags that the eCommerce channel sel

ofitable? What are some of the pros and cons of Timbuk2s Build your own channel (i.e., its e-commerce channel)?

al, eCommerce, Corporate and Other. eCommerce has the most sales and revenue and is the most profitable.

a
custom colored
one forcolors
an additional $15.
periment
with different

ority than bags in other channels.

itional channels.
eCommerce channel sells.

merce channel)?

s the most profitable.

Estimate the cost of manufacturing a bag in San Francisco and the cost of producing a bag in Ch

The total cost to manufacture a bag in San Fransisco is $27.71.

The Total cost to produce a bag in China is "

Costs
Workers wage per bag
Manufacturing overheads
Materials
Expenses
Shipment to San Francisco
Shipping and handling to customer
Total cost

the cost of producing a bag in China.

China (Air
San Francisco China Shipping)
$
7.29 $ 0.94 $
0.94
$
2.92 $ 0.38 $
0.38
$
13.00 $ 13.00 $
13.00
$
1.50 $ 0.75 $
0.75
$
$ 1.00 $
15.00
$
3.00 $ 3.00 $
3.00
$
27.71 $19.06 $ 33.06

San Francisco China

Revenue
$
45.00
###
Hourly Wage
$
12.50 $ 1.25
Direct Labor Content
35 mins 45 mins
Manufacturing Overhead
40%
40%
Materials
$
13.00
###
Other Manufacturing Expenses
$
1.50 $ 0.75
Shipment to San Francisco
$
$ 1.00
Shipment from San Francisco to customers $
3.00
###

China (Air
shipping)
$
45.00
$
1.25
45 mins
40%
$
13.00
$
0.75
$
15.00
$
3.00