Supply Chain Management Case Study Michigan Liquor Control

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Michigan Liquor Control Commission is introduce to the state board and pass the bill in early 1933. In past the while administrative cost as percentage of sales has risen 121% but the number of inventory turns has decreased from 6.7 to 5.5. Nationwide per capita consumption of distilled liquor declined about 3 percent per year. Imply to the price raise up, the consumers will generally purchase the same quantity of liquor but they will shift their consumption to cheaper brands. Michigan's Liquor Control Commission announces a statewide ban on stimulant-laced alcoholic energy drinks. Liquor enforcement is highly sensitive social issue. The anti-alcohol group, such as Mothers Against Drunk Driving has been protest to the public and make consumers are awareness of alcohol problems like underage drinking or driving under influence. The state liquor distribution system is considerably less efficient than private industry. Because the redesigning of the current system will create severely disadvantage themselves relative to larger, high-volume chains and retailers. Summary of Facts

In April 1933, Michigan Liquor Control Commission becomes the first state to authorize of the federal prohibition. The bill for beer and wine was passed and allowed distribution from brewers and wineries to private wholesalers who then resell to retailers. Michigan is one of 18 states in the United States that completely controls the wholesale distribution of the distilled liquor and retail license. The remaining 32 states operate an “open” private license system and the state government is not involved in wholesale distribution at all. The cost of the current distribution network operation is approximately $20 million per year. The distilled liquor is distributed through two-tier network, 75 smaller second-tier state warehouses, which function as wholesale outlets, and 12,00 retail licensees serving consuming public. At fiscal year 2000-2001, the distilled liquor...
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