Question

In: Accounting

You recently recommended new inventory targets for your chilled beverages and dry snacks company, based on...

You recently recommended new inventory targets for your chilled beverages and dry snacks company, based on some super fancy MEIO techniques that you heard about in the class of a brilliant, inspiring, and entertaining lecturer who you later found out was Jack Ryan’s smarter, better looking and dramatically more humble CIA counterpart.

The VP of Supply Chain was thrilled with your thought leadership; but, now she needs to translate those targets into operational and financial impacts. Your analysis resulted in inventory targets expressed as days of forward demand coverage.  

The average COGS per case is $40. 50 cases fit per full pallet. Your recommended target average days of inventory, by product type, is:

  • Snacks: 30 days
  • Beverages: 7 days for Q1; 14 days for Q2 and Q3; 3 days for Q4   

2019 forecasted sales, in COGS ($MM USD);

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Snacks

9.1

9.3

9.3

9.2

9.2

9.1

12.5

8.5

8.8

9.7

10.4

11.6

Beverages

2.5

2.5

2.9

5.7

5.7

15.2

21.1

17.3

16.1

7.4

3.1

2.2

Using this business scenario above, answer the following question:

Assuming one production location and six regional distribution centers, and weekly plant to DC replenishments, if the average full pallet weighs 200 pounds, are you more likely to use LTL or TL on the plant to RDC lanes? Pro tip, a standard truck has room for 26 standard pallets on the floor. Assume you can only stack one additional layer of pallets on top, meaning the maximum pallets per truck is 52.

Show your work or intermediate steps.

Solutions

Expert Solution

Given :

Average COGS = $ 40

50 cases fit on one Pallet

No of days Inventory to be kept

Snacks = 30 days

Beverages = 7 days in Q 1 , 14 days in Q 2 , 14 days in Q 3 and 4 days in Q 4

Average full pallet weights = 200 pounds of 50 cases means 1 case has 4 pounds.

One truck can accommodate 26 Pallets = 5200 Pounds or 1300 cases

Working is given as under

Basic Details given
jan feb mar apr may jun jul aug sep oct nov dec
Snacks 9.1 9.3 9.3 9.2 9.2 9.1 12.5 8.5 8.8 9.7 10.4 11.6
Beverages 2.5 2.5 2.9 5.7 5.7 15.2 21.1 17.3 16.1 7.4 3.1 22
Total 11.6 11.8 12.2 14.9 14.9 24.3 33.6 25.8 24.9 17.1 13.5 33.6
1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000 1000000
jan feb mar apr may jun jul aug sep oct nov dec
Snacks 9100000 9300000 9300000 9200000 9200000 9100000 12500000 8500000 8800000 9700000 10400000 11600000
Beverages 2500000 2500000 2900000 5700000 5700000 15200000 21100000 17300000 16100000 7400000 3100000 22000000
Total 11600000 11800000 12200000 14900000 14900000 24300000 33600000 25800000 24900000 17100000 13500000 33600000
No of Cases @ $ 40 per cases
jan feb mar apr may jun jul aug sep oct nov dec
Snacks 227500 232500 232500 230000 230000 227500 312500 212500 220000 242500 260000 290000
Beverages 62500 62500 72500 142500 142500 380000 527500 432500 402500 185000 77500 550000
Total 290000 295000 305000 372500 372500 607500 840000 645000 622500 427500 337500 840000
No of Pallets @ 50 Cases / Pallet
jan feb mar apr may jun jul aug sep oct nov dec
Snacks 4550 4650 4650 4600 4600 4550 6250 4250 4400 4850 5200 5800
Beverages 1250 1250 1450 2850 2850 7600 10550 8650 8050 3700 1550 11000
Total 5800 5900 6100 7450 7450 12150 16800 12900 12450 8550 6750 16800
No of Trucks required @ 26 Pallets per Truck
jan feb mar apr may jun jul aug sep oct nov dec
Snacks      175.00      178.85      178.85      176.92      176.92      175.00      240.38      163.46      169.23      186.54      200.00      223.08
Beverages        48.08        48.08        55.77      109.62      109.62      292.31      405.77      332.69      309.62      142.31        59.62      423.08
Total      223.08      226.92      234.62      286.54      286.54      467.31      646.15      496.15      478.85      328.85      259.62      646.15
No of Trucks required @ 52 If 52 Pallets are stacked in a Truck
jan feb mar apr may jun jul aug sep oct nov dec
Snacks        87.50        89.42        89.42        88.46        88.46        87.50      120.19        81.73        84.62        93.27      100.00      111.54
Beverages        24.04        24.04        27.88        54.81        54.81      146.15      202.88      166.35      154.81        71.15        29.81      211.54
Total      111.54      113.46      117.31      143.27      143.27      233.65      323.08      248.08      239.42      164.42      129.81      323.08

Hence , we can see that approximately how many trucks are required to accommodate the Loading as per No of Cases per Pallets.

ekkarill92 answered 1 year ago
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