Proyeccion
Blanchard Importing and Distributing II1
After his first year at the Harvard Business School, Hank Hatch accepted summer employment with Blanchard Importing and Distributing, a Boston firm that dealt in the processing and wholesaling of alcoholic beverages. Early in June 1972 Hank met with Toby Tyler, the company's general manager, who was a recent graduate of the Harvard Business School. Toby described the initial tasks that he wanted Hank to perform:
Hank, during your first few days at Blanchard, I'd like you to become familiar with the general scope of operations of the firm. As you investigate our various product lines, I think you will find that the most rapidly expanding demand for alcoholic beverages is in the wine market. At the present time we estimate that we can earn a before-tax return of 20% on any money we put into wine merchandising. However, to date, Carmen Petrillo, our Wine Division manager, and Dave Rubin, the Sales Department manager, have been unable to exploit this trend due to lack of funds needed to hire experienced wine salesmen and build up an adequate inventory of wines. Here is a recent balance sheet which shows that we have just about reached the limit of our borrowing capability [see Exhibit 1]. It appears that a reduction in inventory level is the only substantial source of funds available to us. That's where you come in.
After you've become acquainted with our operations, I'd like you to spend some time analyzing the inventory situation and recommend ways in which we can economize in that area. Initially, you can look into the method we use in scheduling production runs of those beverages which we bottle ourselves. The current scheduling system, which was initiated in October 1969, calls for bottling of an Economic Order Quantity (EOQ) of an item when the stock level of that item falls below a fixed Reorder Point (ROP). This Reorder Point trigger level is equal to 3½ weeks' worth of the average weekly demand throughout the year
After his first year at the Harvard Business School, Hank Hatch accepted summer employment with Blanchard Importing and Distributing, a Boston firm that dealt in the processing and wholesaling of alcoholic beverages. Early in June 1972 Hank met with Toby Tyler, the company's general manager, who was a recent graduate of the Harvard Business School. Toby described the initial tasks that he wanted Hank to perform:
Hank, during your first few days at Blanchard, I'd like you to become familiar with the general scope of operations of the firm. As you investigate our various product lines, I think you will find that the most rapidly expanding demand for alcoholic beverages is in the wine market. At the present time we estimate that we can earn a before-tax return of 20% on any money we put into wine merchandising. However, to date, Carmen Petrillo, our Wine Division manager, and Dave Rubin, the Sales Department manager, have been unable to exploit this trend due to lack of funds needed to hire experienced wine salesmen and build up an adequate inventory of wines. Here is a recent balance sheet which shows that we have just about reached the limit of our borrowing capability [see Exhibit 1]. It appears that a reduction in inventory level is the only substantial source of funds available to us. That's where you come in.
After you've become acquainted with our operations, I'd like you to spend some time analyzing the inventory situation and recommend ways in which we can economize in that area. Initially, you can look into the method we use in scheduling production runs of those beverages which we bottle ourselves. The current scheduling system, which was initiated in October 1969, calls for bottling of an Economic Order Quantity (EOQ) of an item when the stock level of that item falls below a fixed Reorder Point (ROP). This Reorder Point trigger level is equal to 3½ weeks' worth of the average weekly demand throughout the year