Large Bakers

In: Business and Management

Submitted By jvumanalo
Words 453
Pages 2
To: Large Bakers Senior Management
From: Gregg Gregson, Supply Chain Manager
Subject: Inventory Decision

For years, Large Bakers has always been receiving our order for flour in 25 cars per shipment done in a haphazard way. We have been finding means where we can create a balance or trade off with our inventory and carrying costs without compromising customer satisfaction and reduce the risk of stock-out to just 98.5%.

Problem:

We would like to reduce the odds of running out of stock to only 1.5%. Two possible options can be utilized in order to achieve this objective.

Option A - 25-Car per shipment at even intervals with safety stock held for production variation

A fixed order of 25 cars per shipment provides cost savings of $5 per tonne. Moreover, our supplier will be able to guarantee on time delivery as the order cycle is predetermined and fixed. Adding buffer stock per order can reduce risks of stock-outs but this entails having additional carrying costs.

Option B - 25 cars at varying intervals without safety stock.

This will allow us to order 25 car shipments in a variable order cycle in order that we are able to maintain inventory levels at minimum and only order when inventory is depleting to a determined ordering point. Orders in varying intervals have a variable lead time of 4 days as supplier cannot guarantee on-time delivery because it is not known when next orders will be placed.

Analysis

Option A – 25 regular car shipments with additional safety stock done at a fixed cycle of 14 days or 2 weeks will provide a net savings of $183,525. Deciding on this option allows Large Bakers to cover unexpected demand with a standard deviation estimated at 300 tons. With a fixed order cycle, the company will be guaranteed on time loading and delivery of shipment. However, with the additional safety stock, we are likely to incur more…...

Similar Documents

Baker

...requirements of the Software as specified in the Documentation. “Computer” means a virtual machine or physical personal electronic device that accepts information in digital or similar form and manipulates it for a specific result based on a sequence of instructions. “Personal Computer” or “PC” shall mean a hardware product which is designed and marketed with the primary purpose of operating a wide variety of productivity, entertainment, and other software applications provided by unrelated third party software vendors, which operates depending upon the use of a full function and full feature set computer operating system of the type(s) then in widespread use with hardware to operate general purpose laptop, desktop, server and large format tablet microprocessor based computers. This definition of Personal Computer shall exclude hardware products that are designed and/or marketed to have as their primary purpose any number of the following: television, television receiver, portable media player, audio/video receiver, radio, audio headphone, audio speaker, personal digital assistant (“PDA”), telephone or similar telephony based device, game console, personal video recorder (“PVR”), player for digital versatile disc (“DVD”) or other optical media, video camera, still camera, camcorder, video editing and format conversion device, video image projection device, and shall further exclude any similar type of consumer, professional or industrial device. “Software”......

Words: 151760 - Pages: 608

Baker Hughes

...compliance with the FCPA. 4. Discuss the pros and cons of the two groups (independent investigators and blue ribbon experts) used by Baker Hughes. I think the Baker Hughes used the independent investigators and the blue-ribbon experts as a way to change the perception of the company. It was a strategic move because Baker Hughes hired these two groups to solve a problem raised only within 6 months after a prior settlement with the SEC and while the company was still operating under a cease-and -desist order. Even thou the two groups findings did not prove any evidence of illegal activities in Nigeria, they did find other problems related to agents hired by the company. As a consequence Baker Hughes ordered that all the agents hired by the company to be examined and then even more problems, some of them very severe, were found. The process turned out to be very long and expensive for the company. It also affected the company credibility. The positive outcome of hiring these two groups was that it helped Baker Hughes change its current business practices. They made fundamental changes to the company’s business practices channeled especially towards improving compliance, tighter control thru audits of the whole system. The most important changes were made to the process of hiring company agents. Overall new procedures put in place were beneficial for Baker Hughes because they improved compliance and they also improved the company’s business operations. 5. Discuss whether......

Words: 1039 - Pages: 5

Baker Adhesives

...Case 37 – Baker Adhesives Background/Facts This case is about Baker Adhesives which is a small company that manufactures specialty adhesives in Newark, NJ. The setting is June of 2006. Baker Adhesives was a modest company founded by Doug Baker’s father who was a chemist and believed in flexible production systems. Baker Adhesives had recently forayed into international markets with a sale to Novo, a Brazilian toy manufacturer. Alissa Moreno was a sales manager and needed to meet with Doug to discuss the recent results. Going into the meeting Doug is excited at the prospects of finding new markets. As U.S. manufacturing continues to migrate overseas, he is under intense pressure to find new markets. This recent sale to Novo had been a financial boost to Baker Adhesives. The company was able to easily meet the order and in fact it freed up some raw material the company had in inventory. The purpose of the meeting was to finalize details on a new order from Novo that was to be 50% larger than the original order. When the meeting started, Moreno hit Baker with the bad news immediately. The problem was that since Novo order was denominated in Brazilian, the payment from Novo had to be converted into U.S. dollars at the current exchange rate. Exchange rates had changed since the time Baker Adhesives and Novo had agreed on a price, the value of the payment was now substantially lower than anticipated. This was going to hurt profit. So obviously Baker was......

Words: 597 - Pages: 3

Baker

...2. Assuming Baker agrees to the new Novo sale, determine the present value of the expected future cash inflow assuming: (1) there is no hedge, (2) the company hedges using a forward contract, and (3) the company hedges using the money market. No hedge: Present Value: 86.23 * 1815= BRL 156,362.25 BRL 156,362.25 * .4368= $68,299.03 Future Value: BRL 156,362.25 * .4234= $66,203.78 Hedge using forward contract: Present Value: 66,094.32 / (1 + .0215)= $64,703.20 Future Value: BRL 156,362.25 * .4227= $66,094.32 Hedge using money market: Present Value: BRL 156,362.25 / (1 + .065)= BRL 146,819.01 BRL 146,819.01 * .4368)= $64,130.54 3. Are the money markets and forward markets in parity? The above data shows the calculations for the present value of the expected future cash inflow assuming there is no hedge, the company hedges using a forward contract, and the company hedges using the money market. These calculations are done using the current price per gallon of adhesives at 86.23 in Brazilian Real. As you will see below we take into account the change in material cost and find the new price per gallon of the adhesive. This turns out to be 88.39 and we go on to calculate the new present value of the expected future cash inflow assuming there is no hedge, the company hedges using a forward contract, and the company hedges using the money market. The data below shows that the money markets and forward markets are not in parity. We come......

Words: 341 - Pages: 2

Baker Adhesives

...Case #37 Baker Adhesives Synopsis and Objectives Baker Adhesives (Baker) has just made its first foray into international sales and must come to grips with the impact of exchange-rate changes on the profitability of a past order. The company must also formulate a strategy for dealing with exchange-rate risks for future orders. The case is intended as an introduction to exchange-rate risk and the management of that risk. Upon receipt of payment from a past order, the firm realizes that exchange-rate movements have reduced the value of the sale. A follow-on order provides the context for exploring possible mechanisms for managing that risk. In particular, sufficient direction and information is provided to examine both a forward hedge and a money-market hedge. The learning objectives of the case are as follows: * To explore the magnitude and effect of exchange-rate risks. * To illustrate exchange-rate risk management through two conventional hedges—a forward-contract hedge and a money-market hedge. * To demonstrate market parity and identify how preferences arise from unique company characteristics. * To explore issues related to pricing of international bids. Suggested Questions 1. How profitable is the original sale to Novo once the exchange-rate changes are acknowledged? How might the exchange-rate risk, which affected the value of the order, have been managed? 2. Assuming Baker agrees to the new Novo sale, determine the present......

Words: 912 - Pages: 4

Baker H

...Baker Hughes: Brief Overview: World’s second largest fracking company (Seeking Alpha) Formed as a corporation in April 1987 by the merger of Baker International Corp and Hughes Tools Company Operate in 80 countries (10-k) 59400 employees (10-k) 45% of revenues generated in US, 55% generated in North America (Hoovers) Customers: larger integrated oil & gas companies- US companies, international independent companies, and national or state-owned companies Segments: Drilling and Evaluations, Completion and Production, Industrial Services and Other (provide products and services to downstream chemicals and process & pipeline industries) (10-K) Key Resources and Capabilities: Sales organizations- market its own products within the four geographic areas Provide service for products through stock point and service centers located in areas of drilling and production activities throughout the world (10-k) Placed managment close to customers to facilitate strong customer relationships and quick reactions to local market condutions and customer needs (10-K) Remote operation centers allow for the interpretation of data in the field to help customer's "steer" as drilling well (Youtube interview with Derek Mathieson) New advances: sand control for deepwater markets, MWD, LWD (EPMag Interview) Acquired BJ services Greatest competitive advantage in drill bits, packers and downhole motors Reputation for quality downhole tools and equipment (Seeking......

Words: 733 - Pages: 3

Baker Adhresives

...Liu / Kathy Liu | Introduction Brief Company Situation Baker Adhesives is a small company which made specialty adhesives in USA. Market was dominated by a handful of big competitors with international access and slim margins. Baker specialized in accommodating specialty markets with consistent sales and relatively high margins. However, US Manufacturers were relocating overseas and achieved “Economy of Scale”. Therefore Baker Adhesives would be under intense pressure of finding markets abroad. Baker had no long debt but line of credit of USD 180,000 and had an excellent relationship with the local bank from the beginning. The production facilities are old but were readily adaptable and had been well maintained. Baker also possessed a good chemist and a flexible production system, even though his father who was a brilliant chemist and the founder of this company had recently retired. * 2. Problem finding In Feb. 2006, Baker’s first international foray was dealing with Brazilian toy manufacturer Novo of 1,210 gallons. Novo was considering a second order 50% larger than original one. Baker was excited about the fact that they can expand their business to abroad as well as they can generate big margins from their sales with Novo. However receipt of payment from the insured in a foreign currency sale last illustrates the potential currency risk as the exchange-rate had changed since the time Baker and Novo had agreed on a per-gallon price. As a result......

Words: 2066 - Pages: 9

Baker Adhesives

...UV0738 BAKER ADHESIVES In early June of 2006, Doug Baker met with his sales manager Alissa Moreno to discuss the results of a recent foray into international markets. This was new territory for Baker Adhesives, a small company manufacturing specialty adhesives. Until a recent sale to Novo, a Brazilian toy manufacturer, all of Baker Adhesives’ sales had been to companies not far from its Newark, New Jersey, manufacturing facility. However, as U.S. manufacturing continued to migrate overseas, Baker would be under intense pressure to find new markets, which would inevitably lead to international sales. Doug Baker was looking forward to this meeting. The recent sale to Novo, while modest in size at 1,210 gallons, had been a significant financial boost to Baker Adhesives. The order had used up some raw-materials inventory that Baker had considered reselling at a loss a few months before the Novo order. Furthermore, the company had been running well under capacity and the order was easily accommodated within the production schedule. The purpose of the meeting was to finalize details on a new order from Novo that was to be 50% larger than the original order. Also, payment for the earlier Novo order had just been received and Baker was looking forward to paying down some of the balance on the firm’s line of credit. As Baker sat down with Moreno, he could tell immediately that he was in for bad news. It came quickly. Moreno pointed out that since the Novo order was denominated in......

Words: 1947 - Pages: 8

Chet Baker

...CHET BAKER BY: SAEED ALMESAFRI Chesney Henry "Chet" Baker, Jr. was an outstanding American jazz trumpeter, flugelhornist and a vocalist who gained fame during the early fifties. Though he was a talented performer, his talent and life was destroyed by the evil of drugs. Chet Baker was born on December 23, 1929 on a farm on the outskirts of Yale, Oklahoma. Later, shifted to Los Angeles with his parents at the age of 10. Baker, who was privileged with a musical family background enters the musical world when he was a kid. He marks his entrance to the world of music by joining the church choir team. He was introduced to playing trombone by his father who himself was a professional guitar player. Not to mention that his mother was also a very talented pianist. At the age of 13, Baker makes a significant mark in his musical career by replacing the trombone with a trumpet due to the fact that the trombone being huge. Even though Baker received musical education at Glendale Junior High School, he left school at the age of 16 to join the United States Army where and joined the army band. In his transition period, he left the army in 1948 and attended El Camino College in Los Angeles where he studied theory and harmony. But he was dropped out again and joined the army again in 1950. The he became a member of the sixth army band at the Presidio in San Francisco. At this point in his life Baker was into Jazz music. He became a huge fan of Miles Davis and soon he was into......

Words: 1522 - Pages: 7

Bakers

...Large Bakers | Memorandum November 22, 2011 To: Management, Large Bakers From: Greg Gregson, Supply Chain Manager SUBJECT: INVENTORY DISTRIBUTION ANALYSIS – PROPOSED CHANGES TO THE SUPPLY CHAIN Background: As was discussed, a review was performed of the current processes involved in the shipment of flour to our mill. The intent of the review was to determine whether we should change our current INVENTORY MANAGEMENT practices of receiving and processing individual railcars at the rate of approximately 2 cars per day. Discussions with our supplier and the shipping agency indicate that there are likely substantial savings to be realized if alternate shipping practices are adopted that would result in the realization of savings based upon economies-of-scale savings. While additional explanation of the methodology is provided later, the analysis compared the following two patterns: * Option 1 - 25 cars per shipment at 14-day intervals with safety stock held for production variation; or * Option 2 - 25 cars at varying intervals, but with the required extra safety stock. The analysis involved calculating the cost of shipping using different multi-car shipment sizes and determining the value of associated storage charges. By combining these charges, the analysis resulted in finding a TOTAL COST, which when compared to each other the lowest would form the recommended solution. Recommendation: Based upon the analysis that was performed, it is recommended that LARGE BAKER adopts OPTION......

Words: 278 - Pages: 2

Baker Ad

...751 – CORPORATE FINANCIAL POLICY & STRATEGY, FALL 2015 INSTRUCTOR: TOM BARKLEY CASE #3 – “Baker Adhesives” Written reports are to be no more than five typed pages (based on a 12-point Times New Roman font, double-spaced, with 1-inch margins all around). The assignments are due at the beginning of class on Tuesday, December 8, 2015. Baker Adhesives just made its first foray into international sales and needs to come to grips with the impact of exchange-rate changes on the profitability of a past order. The company must also formulate a strategy for dealing with exchange-rate risks for future orders. The case is intended as an introduction to exchange-rate risk and the management of that risk. Answer the following questions in your report: 1. How profitable is the original sale to Novo once the exchange-rate changes are acknowledged? How might the exchange-rate risk, which affected the value of the order, have been managed? 2. Assuming Baker agrees to the new Novo sale, determine the present value of the expected future cash inflow assuming: (1) there is no hedge, (2) the company hedges using a forward contract, and (3) the company hedges using the money market. Finding a present value is necessary for the following reason: with no hedge or with a forward-contract hedge, the cash flow will occur at the time of payment by Novo; with the money-market hedge, Baker receives a cash flow immediately. 3. Are the money markets and forward markets in......

Words: 269 - Pages: 2

Baker Adhesive

...This case is about Baker Adhesives which is a small company that manufactures specialty adhesives in Newark, NJ. The setting is June of 2006. Baker Adhesives was a modest company founded by Doug Baker’s father who was a chemist and believed in flexible production systems. Baker Adhesives had recently forayed into international markets with a sale to Novo, a Brazilian toy manufacturer. Alissa Moreno was a sales manager and needed to meet with Doug to discuss the recent results. Going into the meeting Doug is excited at the prospects of finding new markets. As U.S. manufacturing continues to migrate overseas, he is under intense pressure to find new markets. This recent sale to Novo had been a financial boost to Baker Adhesives. The company was able to easily meet the order and in fact it freed up some raw material the company had in inventory. The purpose of the meeting was to finalize details on a new order from Novo that was to be 50% larger than the original order. When the meeting started, Moreno hit Baker with the bad news immediately. The problem was that since Novo order was denominated in Brazilian, the payment from Novo had to be converted into U.S. dollars at the current exchange rate. Exchange rates had changed since the time Baker Adhesives and Novo had agreed on a price, the value of the payment was now substantially lower than anticipated. This was going to hurt profit. So obviously Baker was concerned and wanted to know what......

Words: 266 - Pages: 2

Ted Baker

...Designer fashion chain Ted Baker has weathered the tough economy to deliver robust rises in sales and profits. The company has reaped the benefits of a global expansion programme, as fellow retailers in the UK feel the pressure from the ongoing squeeze on consumer spending during a double-dip recession. Ted Baker - which started as a shirt store in Glasgow in 1988 - has recently opened new stores in Tokyo and on Fifth Avenue, New York. The chain, which has now 179 stores in the UK including concessions, said retail sales were up 15.4 per cent in the 28 weeks to August 11. The upbeat performance implies like-for-like sales growth of around 3 per cent. The group also revealed a 10.4 per cent increase in underlying pre-tax profits to £9.4million in the half-year period as total revenues rose to £118.6million from £102.8million. Founder and chief executive Ray Kelvin said: 'We have delivered good results in a challenging environment while making important investments for the long term development of the brand.' The group said UK and European retail sales rose 8 per cent to £74.7million, while the U.S. saw growth of 53 per cent to $25.6million (£15.9million). Women’s wear was a strong performer with sales up 24.5 per cent at £66.1million, representing 55.7 per cent of total sales, although more women’s wear space was added in the period. Menswear sales were up 5.7 per cent to £52.5million. In 2015, Ted Baker has released a positive trading update today,......

Words: 1644 - Pages: 7

Baker Adhesives

...Baker Adhesives Case Analysis I. Introduction Baker Adhesives is a small manufacturing company of specialty adhesives in the US. It was owned by Doug Baker who recently entered the International market. In early June of 2006, Baker met with his sales manager, Alissa Moreno to discuss the results of the company’s recent penetration in the international market. NOVO, a Brazilian toy manufacturing company, was Baker’s first international sales and Baker Adhesives was very excited to make another deal. The original sale with NOVO had been 1,210 gallons and significantly boosted the company financially. The purpose of the meeting is to decide whether or not Baker Adhesives should go ahead and accept a new order proposal from Novo. The next NOVO order would be 50% larger than the original order and the adhesive will be used for the production of their new toy product line. The toys needed to be waterproof and the adhesives require very specific needs. Also, the payment from the first order had just been received and Baker was looking to pay down some of the balance of their line of credit, which currently stood at $180,000. However, Moreno told Baker that their sale of adhesives to NOVO was not going to be as profitable as they originally anticipated. The first order from Novo was denominated by Brazilian real (BRL) which would be converted into US dollars (US$). Since the time that Baker and Novo agreed to terms on the sale, the value of the deal had dropped......

Words: 2421 - Pages: 10

Baker Hughes

...“Baker Hughes Fiscal 2011” Patrice Johnson Professor Harper ACC 100 May 15, 2012 Baker Hughes Incorporated supplies oilfield services, products, and technology services and systems to the oil and natural gas industry worldwide. The company offers drilling and evaluation products and services, including drill bits for performance drilling, hole enlargement, and coring; conventional and rotary steerable systems; measurement-while-drilling and logging-while-drilling systems to perform reservoir navigation services; drilling optimization services; tools for coil tubing drilling and wellbore re-entry systems; coring drilling systems; surface logging systems; emulsion and water-based drilling fluids systems; and reservoir drill-in fluids, as well as fluids environmental services. Its drilling and evaluation products and services also comprise wire line services, such as tools for open hole and cased hole well logging to gather data to perform petro physical and geophysical analysis; reservoir evaluation coring; casing perforation; fluid characterization; production logging; well integrity testing; pipe recovery; and seismic and micro seismic services. In addition, the company provides completion and production products and services consisting of completion systems; wellbore intervention products and services to improve the performance of existing wellbores; intelligent production system products and services to monitor and control the production from individual wells or......

Words: 4215 - Pages: 17