Blanchard Importing and Distribution Co., Inc. Harvard Case Solution & Analysis

Blanchard Importing and Distribution Co., Inc. Case Solution

Problem Statement

Hank Hatch was the recent student in Harvard Business School and wanted to gain some experience in the industry level for the coming summer. However, he preferred Blanchard in order to become a part of the operation management and wanted to work for the limited time duration. On the other hand,Toby Tyler (Company’s General Manager) gave him some tasks to analyse the inventory practices in import and distribution activities when he joined.

During the job, Hank assessed some of the major decisions for the coming period by analysing the historical performance of reorder point and economic order quantity factors. Previously, he learned how to process the inventory from the starting point to the distribution. During the process, he gained some knowledge about the current impact of converting the bulk into the bottled goods. Apart from that,he also analysed that what should be the tax obligations for any particular goods based on the quantity of withdrawals from customs warehouse.

He also learned how to rectify the bulk during the production phase of the finished goods and also make sure that these changes could vary according to the quantity demand and level of cost incurred. Hank also analysed the potential benefits of low unit costs which occurred through more efficient labour under less quantity.

After the critical analysis, he recognized that the level of existing economic order quantity and reorder point should change because of the additional unit and processing cost associated with it.On the other hand,he also madesure that some replenishment activities should be filledin order to stock new inventories. According to the current case, the rescheduling activities would consider differentiating with the old operations factors in order to know the current deviation of inventory stock.

Case Analysis

Hank Hutch analysed different factors which had to be excluded during the process of economic order quantity ashe knew that certain changes would occur during the resetting of the overall process through size changeover, label changeover as well as order processing cost. He also determined the reduction of a particular unit cost associated with the new process. In addition,it had assumed that the cost of capital would be 5% of borrowing and in total of 17% form the return of investment and carrying cost other than capital. After all the changes, it is concluded that EOQ and ROP might change according to the current changes incurred for the process.

Additional Data

It has been assumed that the return on investment would be 15% instead of 20% implemented in the past. The hourly wage rate is estimated to be $3 per hour and it has determined that the reorder point trigger would set to 4 weeks. However, waiting time for resetting the machine would be the same and consisted of 0.5 per hour.

Annual Demand

As the sudden changes have been implemented in order to meet the demand for order processing and resetting the process,therefore the annual demand would increase in the new scenario as they were likely to distribute more controlled products under existing as well as new finished goods.

Setup Cost

These costs incurred during the phase of production and consists of the additional costs associated to control the entire production phase like labour cost, replenishment and the other variable cost such as maintaining the efficiency of the production. In that case, the setup cost of Vodka would be 7.5, which represents the total setup cost per unit of production................

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