Dream Beauty Case Study

Dream Beauty Case2Your Title Goes HereI.MAJOR FACTSa.A beauty supply manufacturer’s management is concerned about their increasing supply chain cost they are currently incurring (Bowersox et al, 2012). b.The manufacturer reached all time high of $130,000,000. Additional sales could be responsible for the increasing cost however; cost could be related to their current supply chain cost, though their areas of order fulfilment, which is composed of order processing, packaging, labeling and delivery (Bowersox et al, 2012). c.Current total cost for order fulfilment is as follows:i.Order Processing $10,000,000ii.Packaging$8,000,000iii.Labeling$2,000,000iv.Delivery$30,000,000v.Totaling$50,000,000d.Total order fulfilment time is currently averages three days regardless of the size of the order. For the time period being addressed, the company received a total of 3600 orders. (Bowersox et al, 2012).e.The manufacturer distributes its products to retail stores, convenience stores, and mass merchants. Documented sales were accounted as follows:i.Retail50%ii.

Unformatted text preview: Dream Beauty Case Solution Current Assignment of Costs (000') Mass Segment Retail C-Stores Merchants Total Sales $65,000 $39,000 $26,000 $130,000 COGS $26,000 $15,600 $10,400 $52,000 Gross Margin $39,000 $23,400 $15,600 $78,000 Order Costs $5,000 $3,000 $2,000 $10,000 Packaging Costs $4,000 $2,400 $1,600 $8,000 Labeling Costs $1,000 $600 $400 $2,000 Delivery Costs $15,000 $9,000 $6,000 $30,000 Total Logistics Cost $25,000 $15,000 $10,000 $50,000 Segment Profit $14,000 $8,400 $5,600 $28,000 % Contribution 22% 22% 22% 22% DREAM BEAUTY Order Processing: Retail: (1,000 orders/3,600 total orders) x $10,000 = $2,778 C-stores: (2,500/3,600) x $10,000 = $6,944 Mass Merchants; (100/3600) x $10,000 = $278 Packaging Retail: (800/2,000) x $8,000 = $3,200 C-stores = (1,100/2,000) x $8,000 = $4,400 Mass Merchants = (100/2,000) x $8,000 = $400 Delivery Retail: (800/2,000) x $30,000 = $12,000 C-stores: (1,100/2,000) x $30,000 = $16,500 Mass Merchants: (100/2,000) $30,000 = $1,500 Dream Beauty Activity Costs Dream Beauty-Activity Based Analysis (000') Mass Segment Retail C-Stores Merchants Total Sales $65,000 $39,000 $26,000 $130,000 COGS $26,000 $15,600 $10,400 $52,000 Gross Margin $39,000 $23,400 $15,600 $78,000 Order Costs $2,778 $6,944 $278 $10,000 Packaging Costs $3,200 $4,400 $400 $8,000 Labeling Costs $0 $0 $2,000 $2,000 Delivery Costs $12,000 $16,500 $1,500 $30,000 Total Logistics Cost $17,978 $27,844 $4,178 $50,000 Segment Profit $21,022 ($4,444) $11,422 $28,000 % Contribution 32%-11% 44% 22% Dream Beauty: Inventory Costs Retail Cost of Goods = $26,000 Carry 90 days of inventory, therefore turns = 4/year Average inventory = $6,500 Annual inventory carrying cost = 15% = $975 C-Stores Cost of Goods = $15,600 Carry 60 days of inventory, therefore turns = 6/year...
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