Smart Coffee is an internationally operating company that sells premium coffee to restaurants, delicatessen stores, and...

  

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Smart Coffee is an internationally operating company that sells premium coffee to restaurants, delicatessen stores, and wholesalers. They want to develop a new distribution concept for the DACH region. Different strategic and tactical decisions have already been made and it was decided to establish a new regional warehouse in southern Germany to be more flexible in delivering coffee to all customers in Germany, Austria and Switzerland. The warehouse itself receives products from Smart Coffee's central warehouse close to Rotterdam harbor. Your task is to find a good logistic concept including the volume and schedule of orders from the regional warehouse to the central one in Rotterdam. Moreover, Smart Coffee is interested in the logistics costs and the inventory level to be expected. To provide all the insights required, different departments have collected relevant information that are shown below. Please answer the following questions based on this information. - The sales department expects customer demand to be stable over the next weeks. They assume that in total 480 boxes of coffee will be ordered over the next 12 weeks. One box of coffee is sold for 800. - Smart Coffee would like to establish a service level of 90% - The supply chain management department has talked to all responsible persons and collected relevant transport and warehousing costs: Transport from Rotterdam to warehouse Inventory costs Warehousing costs Replenishment time (from Rotterdam to warehouse) 415 per truck (max. payload 250 boxes) 10% per year (52 weeks/year) 5% per year (52 weeks/year) 14 days (= 2 weeks) a) Your first task is to create a general order strategy based on the information provided by Smart Coffee's departments. In order to do so, calculate the required service stock level as well as the order quantity for cycle inventory. How long are the order cycles and how high are the overall costs for the next 12 weeks? b) Calculate the inventory level for each week according to the strategy established in task a). Assume that the first order has already been made two weeks before starting to sell coffee from the regional warehouse, so that the inventory level at the beginning of week 1 equals the amount of safety stock plus one order quantity. c) After 12 weeks, Smart Coffee wants to check whether the order strategy worked out. Below, you can find the actual sales per week. Use this information to update the inventory levels from task b) and the cost calculation from a). In case safety inventory had to be used to satisfy demand, assume that it is re-ordered with the next order of cycle inventory, i.e. safety inventory can only be refilled in order weeks. If Smart Coffee is unable to satisfy demand in one week, they make up for missed deliveries as soon as possible. Week Demand Week Demand Week Demand Week 28 90 7 12 10 52 8 20 11 34 20 12 2 3 62 46 5 6 9 Demand 10 34 72 d) How would you assess the order strategy established in a)? Is it a fitting one for Smart Coffee? Provide a short argumentation for your assessment. Smart Coffee is an internationally operating company that sells premium coffee to restaurants, delicatessen stores, and wholesalers. They want to develop a new distribution concept for the DACH region. Different strategic and tactical decisions have already been made and it was decided to establish a new regional warehouse in southern Germany to be more flexible in delivering coffee to all customers in Germany, Austria and Switzerland. The warehouse itself receives products from Smart Coffee's central warehouse close to Rotterdam harbor. Your task is to find a good logistic concept including the volume and schedule of orders from the regional warehouse to the central one in Rotterdam. Moreover, Smart Coffee is interested in the logistics costs and the inventory level to be expected. To provide all the insights required, different departments have collected relevant information that are shown below. Please answer the following questions based on this information. - The sales department expects customer demand to be stable over the next weeks. They assume that in total 480 boxes of coffee will be ordered over the next 12 weeks. One box of coffee is sold for 800. - Smart Coffee would like to establish a service level of 90% - The supply chain management department has talked to all responsible persons and collected relevant transport and warehousing costs: Transport from Rotterdam to warehouse Inventory costs Warehousing costs Replenishment time (from Rotterdam to warehouse) 415 per truck (max. payload 250 boxes) 10% per year (52 weeks/year) 5% per year (52 weeks/year) 14 days (= 2 weeks) a) Your first task is to create a general order strategy based on the information provided by Smart Coffee's departments. In order to do so, calculate the required service stock level as well as the order quantity for cycle inventory. How long are the order cycles and how high are the overall costs for the next 12 weeks? b) Calculate the inventory level for each week according to the strategy established in task a). Assume that the first order has already been made two weeks before starting to sell coffee from the regional warehouse, so that the inventory level at the beginning of week 1 equals the amount of safety stock plus one order quantity. c) After 12 weeks, Smart Coffee wants to check whether the order strategy worked out. Below, you can find the actual sales per week. Use this information to update the inventory levels from task b) and the cost calculation from a). In case safety inventory had to be used to satisfy demand, assume that it is re-ordered with the next order of cycle inventory, i.e. safety inventory can only be refilled in order weeks. If Smart Coffee is unable to satisfy demand in one week, they make up for missed deliveries as soon as possible. Week Demand Week Demand Week Demand Week 28 90 7 12 10 52 8 20 11 34 20 12 2 3 62 46 5 6 9 Demand 10 34 72 d) How would you assess the order strategy established in a)? Is it a fitting one for Smart Coffee? Provide a short argumentation for your assessment.

Answer rating: 100% (QA)

Solution a To determine the order strategy we first need to calculate the required service stock level and order quantity for cycle inventory Service stock level The service level of 90 means that Sma... View the full answer