Your textbook identifies three supply chain performance metrics concerning inventory at the end of Chapter 11. Your assignment is to review the two provided company annual reports for 2018 (Dollar General and Family Dollar Tree) and find the data necessary to compare the following metrics for each company:
• Percentage invested in inventory
• Inventory turnover
• Weeks of supply
You will find the formulas for each of the metrics in your text. When reviewing annual reports, you should find the Form 10-K, which provides the company’s financial statements. The Balance Sheet typically will contain the Inventory Investment (Merchandise Inventories) and Total Assets. The Cost of Goods Sold or Cost of Sales will typically be found on the Income Statement or in the Consolidated Statement of Operations. Find the indicated data points and calculate the three metrics listed above. Pay attention to the data format (e.g., in thousands or millions). Use the most recent data ended (e.g., February 2, 2019, for Dollar Tree and February 1, 2019, for Dollar General. Then compare the metrics between the companies and provide your assessment of which company is performing better. Assume industry benchmarks of the following:
• Inventory Turnover = 3.91
• Percentage Invested in Inventory = 27.0%
• Weeks of Supply = 11.40
You should provide the metrics for each company and then write a 1-paragraph minimum assessing performance using a font no larger than 12-points. You may use any additional source for your information (e.g., internet, news articles, magazines, etc.)
Assignment 2
Consider the following:
Bill Johnson, a small business owner (Holiday Imports) imports holiday merchandise from China and resells the items. He realizes that he needs to analyze his supply chain for improvements, but does not know where to begin and has asked you for your ideas. You begin by considering the following four issues:
• Evaluating disaster risk in the supply chain
• Supplier Evaluation
• Bullwhip Effect
• Transportation Mode Analysis
The business owner hires you to assist with deciding on potential changes in these areas. The first decision to consider is the number of suppliers to include within his supply chain. You decide to look at risk first to determine how many suppliers are optimal.
Problem #1 - Evaluate between one, two, and three supplier approaches. Evaluation data given below is based on historical data, climate forecasts, and geological forecasts.
S = Probability of a “super-event” negatively impacting all suppliers simultaneously to be 0.3% (i.e. probability = 0.003)
U = Probability of a unique event impacting any one of the suppliers to be 6% (i.e. probability = 0.06)
C = Marginal cost of managing an additional supplier = $10,000
L = Financial loss incurred if a disaster caused all suppliers to be down simultaneously is
$1,000,000
How many suppliers should Holiday Imports utilize in the supply chain based on the information above?
Problem #2 is attached with the files.
Problem #3 – The owner now wants to analyze whether or not his ordering pattern is contributing to a bullwhip effect or not. Over the past ten weeks, demand for Fourth of July decorations has been: 210, 100, 190, 180, 220, 200, 215, 198, 225, 231. The owner has placed the following orders over the same ten weeks: 200, 150, 190, 150, 180, 250, 200, 180, 210, 250.
Using the Bullwhip Metric, assess whether or not the owners ordering pattern has contributed to a bullwhip effect or not. Remember, if the metric is > 1, then the ordering pattern is contributing to a bullwhip effect. Hint – you can use Excel to find the variance of the sample datasets by using the VAR.S function.
Problem #4 – The final portion of your analysis concerns transportation mode and analyzing holding cost versus shipping options. To begin tranporting a new product, the owner needs to determine whether or not he should incur the extra cost of expedited shipping and save holding cost or use slower shipping modes and pay the holding cost. The value of the shipments is $17,690. To store the merchandise, the holding cost of the merchandise is 35% of the shipment value. An airfreight carrier can ship the products five days faster than slower transportation modes, but the extra cost is $180.00.
Using transportation mode analysis, determine if the owner should pay the additional money for expedited shipping or use slower shipping and warehouse the merchandise. Calculate the savings for the choice selected.
Sample Solution