Case 10 Happy Chips
Performance Control at Happy Chips Incorporated
Table of Contents
Abstract…………………………………………………………………………………………....3
Performance Control at Happy Chips Incorporated……………..…………………………….4 – 7
Happy Chips Segment Profitability Analysis……………………………………………………..8
Happy Chips Income Statement and Annual Logistics Cost by Segment….……………………..9
References………………………………………………………………………………………..10
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Abstract
The director of logistics at Happy Chips Incorporated had recently circulated a letter that came from the only mass merchandiser, Buy 4 Less, complaining of poor performance. Buy 4 Less is looking for Happy Chips to increase deliveries by one per week to ensure no stockouts occurred, install an automated order inquiry system costing $10,000 to increase customer service responsiveness, and to decrease prices by five percent. Happy Chips management decided to complete a segment profitability analysis to see where they may be able to increase company profits. Through extensive research the paper shows that out of the three segments Buy 4 Less was losing the company money, while the grocery and drug segments were both producing profits. This paper will also show what it would look like if Happy Chips followed through with the Buy 4 Less requirements and what profits would look like if the mass merchandise segment was dropped all together and prices were raised by twenty percent. While several things can factor into company operations, the research also focused on how completing a activity-based costing analysis may benefit Happy Chips and could ultimately allow the 90 year old company a second opportunity of expansion outside the metropolitan Detroit area.
Performance Control at Happy Chips Incorporated
Happy Chips Incorporated was founded in 1922 and is the fifth largest potato chip manufacturer in the metropolitan Detroit market (Bowersox,
Table of Contents
Abstract…………………………………………………………………………………………....3
Performance Control at Happy Chips Incorporated……………..…………………………….4 – 7
Happy Chips Segment Profitability Analysis……………………………………………………..8
Happy Chips Income Statement and Annual Logistics Cost by Segment….……………………..9
References………………………………………………………………………………………..10
.
Abstract
The director of logistics at Happy Chips Incorporated had recently circulated a letter that came from the only mass merchandiser, Buy 4 Less, complaining of poor performance. Buy 4 Less is looking for Happy Chips to increase deliveries by one per week to ensure no stockouts occurred, install an automated order inquiry system costing $10,000 to increase customer service responsiveness, and to decrease prices by five percent. Happy Chips management decided to complete a segment profitability analysis to see where they may be able to increase company profits. Through extensive research the paper shows that out of the three segments Buy 4 Less was losing the company money, while the grocery and drug segments were both producing profits. This paper will also show what it would look like if Happy Chips followed through with the Buy 4 Less requirements and what profits would look like if the mass merchandise segment was dropped all together and prices were raised by twenty percent. While several things can factor into company operations, the research also focused on how completing a activity-based costing analysis may benefit Happy Chips and could ultimately allow the 90 year old company a second opportunity of expansion outside the metropolitan Detroit area.
Performance Control at Happy Chips Incorporated
Happy Chips Incorporated was founded in 1922 and is the fifth largest potato chip manufacturer in the metropolitan Detroit market (Bowersox,
References: (Bowersox, D.J., Closs, D.J., and Cooper, M.B. (2010). Supply Chain Logistics Management. (3rd Edition) New York, NY: McGraw-Hill/Irwin.