Supply Chain Managment

In: Business and Management

Submitted By lschmelich1975
Words 742
Pages 3
Case 11: The Cooper Processing Company
The Cooper Processing Company (CPC) is a manufacturer, or processor, of food products.
Located in Lansing, Michigan, the company provides a national market with processed and packaged meat items, such as hot dogs, bologna, and sausage. Due to increased costs in marketing and logistics, CPC hired you as an expert to analyze costs and investments. After analysis, make recommendations to management.
The company sells its products through two separate channels of distribution. Each is treated as a separate profit center with full financial responsibility for income statement and balance sheet.
The first channel is associated with retail grocery stores and supermarkets. The second channel is associated with foodservice wholesalers who, in turn, sell to restaurants and other foodservice establishments. According to the company’s accounting records, the retail segment accounts for
60% of sales, and foodservice for 40%. The cost accountant believes that both channels are profitable. He says that the company achieves an overall average gross margin of 60% on its sales. In its most recent fiscal year, the company achieved sales of $100,000,000.
The cost accountant also provides the following total costs for various marketing and logistics activities at CPC:
• Personal Selling
• Sales Promotions
• Order processing
• Packaging
• Labeling
• Delivery
Total Marketing & Logistics costs

$5,000,000
$8,000,000
$10,000,000
$5,000,000
$2,000,000
$10,000,000
$40,000,000

The total of all other expenses at CPC is $15,000,000.
The company’s cost accountant had previously allocated all expenses and investments to the channels based on the percentage of sales volume and has used the overall company average of
60% gross margin to determine the profitability of each channel of distribution.
You, being much wiser than…...

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