Whirlpool Corporation Global Procurement Harvard Case Solution & Analysis

Whirlpool Corporation Global Procurement Case Study Help

Key Points in Case Exhibit 2:

The key points have been noted in the case Exhibit 2, which are related to the following aspects:

  • Cost drivers from whom the prices of raw materials should be chargedon different applicable products and services.
  • Cost drivers from whom the prices of simple transformation and processes components should be charged on different applicable products and services.
  • Cost drivers from whom the prices of engineered subsystems should be charged on different applicable products and services.
  • Along with that, the key point that has been noted in the case Exhibit 2 is to find out different modeling approach for different groups, such as: raw materials, simple transformation and process components and engineered subsystems

Ideas around Cost Modeling:

Scrap and defect rate could also affect the material cost, however, we were not provided with this information. Secondly, the labor cost per unit element is influenced by the wage rate driver under Geography, and the labor productivity driver under Operations (which could also be influenced by parts per mold and shifts in each region). As the data shows that the average hourly wage driver is positively correlated with the labor cost per unit element, while both parts per mold and shift drivers are negatively correlated with the labor cost per unit.

The production cost per unit element can be drilled down to the cost center rates as well as parts per mold in Operations. We assume that the cost center rates are the cost drivers that affect the production cost per unit positively, while parts per mold could affect the production cost negatively. Other cost drivers, such as: production volume and the scrap and defect rate can also affect the production cost to a certain extent. Lastly, the tooling cost per unit is primarily driven by the overall tooling cost for each part and the production volume. We have calculated the tooling cost per unit based on the global volume requirement in order to compare the tooling cost per unit for each region on the same scale.

Applicability of Cost Modeling in Services from Outside Supplier:

The choice is relevant to the two merchandise and ventures. Organizations think about the expenses and advantages of delivering the merchandise or administrations inside the organization and the expense and advantages of getting an outside provider to supply the products and enterprises are thought about. The expense here must incorporate all the expenses related with assembling (counting material, work, cost of apparatus and space), putting away, moving and charges etc. And the comparing benefits must remember the benefits for terms of expanded edges (for in-house creation) or low capital necessity (for re-appropriating).

Under a quantitative examination, organizations consider all the expenses related to delivering the item or administration in-house. These expenses incorporate the expense of purchasing and looking after gear, cost of the premises (rent, and so forth.), crude material cost, transformation cost, cost of fuel and power, work cost, warehousing or capacity cost, shipping cost and the expense of capital. The advantages incorporate higher edges from in-house creation.

The expense related tothe re-distributed creation incorporates the cost of the item and administration, transportation, warehousing and capacity and work costs for dealing with the coordination. The main motive to do the cost modeling is to find the pieces of evidenceproving that one region is performing better than the other, with an inclusion of thepieces of evidenceproving that one supplier is providing better results than the others.................................


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