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Contemporary Logistics, Paul R. Murphy - Case Study 3 - BRANT FREEZER COMPANY

MBA Logistics and SCM

LOGISTICS, GLOBAL LOGISTICS, SUPPLY CHAIN MANAGEMENT 2016

Test Bank, Discussion, Case study guides and Online Resources (2016)

Logistis, Global Logistics, International Logistics, Supply Chain Management

 

 

CASE 3-1 BRANT FREEZER COMPANY

 

Question 1: When comparing performance during the first five months of 2013 with performance in 2012, which warehouse shows the most improvement?

 

St. Louis is the only one showing any improvement, using cost per unit shipped as the performance criterion. The cost for the first five months of 2012 was $9.97 and for the first five months of 2013, it fell to $9.07.

 

Question 2: When comparing performance during the first five months of 2013 with performance in 2012, which warehouse shows the poorest change in performance?

 

The worst change is the company’s own warehouse (located in Fargo), where costs per unit shipped increased 31%. Among the public warehouses used, Denver was the worst in terms of cost per unit handled. It is also the most expensive public warehouse that Brant uses.

 

Question 3: When comparisons are made among all eight warehouses, which one do you think does the best job for the Brant Company? What criteria did you use? Why?

 

Using the cost per unit handled criterion, St. Louis does the best job, closely followed by Chicago.

 

Question 4: J.Q. is aggressive and is going to recommend that his father cancel the contract with one of the warehouses and give that business to a competing warehouse in the same city. J.Q. feels that when word of this gets around, the other warehouses they use will “shape up.” Which of the seven should J.Q. recommend be dropped? Why?

 

Denver has the lowest volume and highest unit costs among all the public warehouses used. In addition, it had been closed by a strike which must have inconvenienced the Brant Company. It may be that the warehouse workers’ unions are strong in the Denver area. J.Q. should probably check out rates and productivity measures of other Denver warehouses before deciding to drop its current warehouse there.

 

Question 5: The year 2013 is nearly half over. J.Q. is told to determine how much the firm is likely to spend for warehousing at each of the eight warehouses for the last six months of 2013. Do his work for him.

 

There is not enough information to do a very precise forecast. J.Q. assumes that the proportion of costs occurring during the first five months of 2012 should be in the same proportion in 2013.

 

 

                                       (1)                       (2)                        (3)                        (4)

 

Warehouse location

% 2012 costs occurring in first five months

Actual costs for first five months of 2013 ($)

Projected total costs in 2013

($)

Projected costs in the last six months of 2013 ($)

Atlanta

22.88

40,228

175,822

116,204

Boston

44.00

29,416

66,885

32,085

Chicago

53.43

141,222

264,312

105,556

Denver

35.00

14,900

42,571

23,714

Fargo

54.00

9,605

17,787

7,012

Los Angeles

72.20

93,280

129,197

30,781

Portland

49.30

42,616

86,442

37,559

St. Louis

44.80

19,191

42,837

20,265

 

The projected costs in 2013 (column 3) are calculated by dividing the actual costs for the first five months of 2013 (column 2) by the percent of 2012 costs that occurred in the first five months (column 1). For example, Atlanta’s actual 2013 costs of $40,228 divided by 2012’s 22.88% yields projected 2010 costs of approximately $175,822.

 

The projected costs in the last six months of 2013 (column 4) are calculated by subtracting the actual costs for the first five months of 2013 (column 2) from 2013’s projected total costs (column 3). This gives us the projected costs for the last seven months of 2013. However, we are only interested in the last six months of 2013, so this number is multiplied by 6/7, or .857. Continuing with Atlanta, 2013’s projected total costs of $175,822 minus the first five months’ actual costs of $40,228 equals $135,394. Multiplying this by 6/7 yields projected six months’ costs of approximately $116,204.

 

Question 6: When comparing 2012 figures with the 2013 figures shown in the table, the amount budgeted for each warehouse in 2013 was greater than actual 2012 costs. How much of the increase is caused by increased volume of business (units shipped) and how much by inflation?

 

There are several ways to approach this question. One involves calculating the volume difference and inflation difference for each warehouse, as follows:

 

Volume difference = 2012 unit costs x (2013 units shipped – 2012 units shipped)

 

Inflation difference = 2013 units shipped x (2013 unit costs – 2012 unit costs)

 

 

For example, Atlanta’s volume and inflation differences are:

 

Volume difference: $8.99 x (18,000 – 17,431) = $8.99 x 569 = $5,115

 

Inflation difference: 18,000 x ($9.97 - $8.99) = 18,000 x $.98 = $17,640

 

 

 

Question 7: Use the 2012 income statement and balance sheet to complete a Strategic Profit Model for J.Q.

 

 

Question 8: Holding all other information constant, what would be the effect on ROA for 2012 if warehousing costs declined 10 percent from 2012 levels?

 

Given that warehousing costs were $735,982 for 2012, a 10% reduction would be approximately $73,598.  Thus, total expenses would decrease to $2,412,569 ($2,486,167 – $73,598), with the following SPM:

 

 

 

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Free Online LOGISTICS, GLOBAL LOGISTICS AND INTERNATIONAL LOGISTICS MANAGEMENT

Learning marterial and resources for courses in:

1. See full list of videos: Link

2. Free Logistics, Global Logistics, International Logistics - 2016 Ebooks (free download)

GLOBAL LOGISTICS MANAGEMENT, A Competitive Advantage for the 21st Century, 2nd Edition, 2006, Kent N. Gourdin - Link download free 

INTERNATIONAL LOGISTICS AND SUPPLY MANAGEMENT, Allan Carrol, 2016 - Link download free

Logistics & Supply Chain Management, 4th Edition, 2011, Martin Christopher, Prentice Hall - Link download free

Logistics Management, 2012, David B. Grant, Prentice Hall - Link download free

The Supply Chain Management Casebook, Comprehensive Coverage and Best Practices in SCM, 2013, Chuck Munson Link download free

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Logistics & Supply Chain Management, 5th Edition, 2016, Martin Christopher, Prentice Hall
Contemporary Logistics, 11th Edition, 2015, Paul R. Murphy, A. Michael Knemeyer
Production and Logistics in Meeting, Expositions, Events and Conventions, 2015, George G. Fenich
Supply Chain and Logistics Management Made Easy: Methods and Applications for Planning, Operations, Integration, Control and Improvement, and Network Design, 2015, Paul A. Myerson

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The world merchant fleet in 2014 Statistics from Equasis - Link download free
Review of MaRitime Transport, 2015 - Link download free

3. Website and All articles about Logistics, Global Logistics, International Logistics and Supply Chain Management

http://top20mba.com 

4. Case Study Guides

5. Link to power point slides (Free Download)

Contemporary Logistics, 11th Edition, 2015, Paul R. Murphy, A. Michael Knemeyer

Murphy - Link download free

Production and Logistics in Meeting, Expositions, Events and Conventions, 2015, George G. Fenich

Fenich  - Link download free

6. Test Bank - Free download

Murphy 2015 - link

Fenich - link 

Murphy 2016 - link 

 

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2018

Contemporary Logistics, 12th Edition, Paul R. Murphy, 2018
Part I: An Overview of Logistics
1. An Overview of Logistics
2. Logistics and Information Technology
3. Strategic and Financial Logistics
4. Organizational and Managerial Issues in Logistics
Part II: Supply Chain Management
5. The Supply Chain Management Concept
6. Procurement
Part III: Elements of Logistics Systems
7. Demand Management, Ordered Management, and Customer Service
8. Inventory Management
9. Facility Location
10. Warehousing Management
11. Packaging and Materials Handling
12. Transportation
13. Transportation Management
14. International Logistics

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