Case Analysis: Blanchard Importing and Distributing
Managing Business Operations
Case Analysis: Blanchard Importing and Distributing Co. Inc. (HBS Case 9 - 673 - 033)
Submitted by: Tushar Kothavale (130) NMIMS, FT MBA 2009-2011
1) Correct the Economic Order Quantity (EOQ) and Reorder point (ROP) quantities for each of the five items mentioned in the case.
We first predict the annual demand for the year 1972 based on trend for 4 months of 1972 based on corresponding months of 1971.
Calculations for Annual demand (R):
The assumption made here is that the same trend for sales as that for the four months of 1972 would be followed for the rest of the months of the 1972.
Sales prediction for annual demand for year 1972
Feb
Mar
Apr
May
Total Sales
Percentage Change over 1971
Annual Demand
Vodka
1971
128
136
233
219
716
2455
1972
210
303
275
463
1251
74.72
4289
Gin
1971
51
52
74
157
334
1421
1972
166
142
133
213
654
95.81
2782
Scotch
1971
79
82
151
66
378
800
1972
82
68
66
38
254
-32.80
538
Whiskey
1971
163
180
198
183
724
3096
1972
177
163
162
256
758
4.70
3241
Rum
1971
10
34
44
26
114
449
1972
11
28
61
55
155
35.96
610
Calculations for Setup cost (S):
Size changeover cost = (cost of resetting all machinery for change in bottle size/ avg. no. of different items of given size processed between size changeover) = 23000 / (52X7X10) = $6.3186 per changeover
Label changeover cost = Labour cost incurred while label changeover process = (23000X0.5X8*)/(52X7) + 5X2.5X0.5 = $10.2 per labour changeover
*Assumption each working day is of 8 hrs.
Order Processing cost = 18000/ 350 = $51.43 per order.
All figures in $
Blending Setup Cost
Size changeover cost
Labour changeover cost
Order processing cost
Total setup cost (S)
Blanchard 's 80 proof Vodka
1.15
6.32
10.2
51.43
69.10
Blanchard 's 80 proof Gin
1.08
6.32
10.2
51.43
69.03
MacCoy & MacCoy 86 proof Scotch
3.24
6.32
10.2
51.43
71.19
Triple 7 86 proof Blended
Case Analysis: Blanchard Importing and Distributing Co. Inc. (HBS Case 9 - 673 - 033)
Submitted by: Tushar Kothavale (130) NMIMS, FT MBA 2009-2011
1) Correct the Economic Order Quantity (EOQ) and Reorder point (ROP) quantities for each of the five items mentioned in the case.
We first predict the annual demand for the year 1972 based on trend for 4 months of 1972 based on corresponding months of 1971.
Calculations for Annual demand (R):
The assumption made here is that the same trend for sales as that for the four months of 1972 would be followed for the rest of the months of the 1972.
Sales prediction for annual demand for year 1972
Feb
Mar
Apr
May
Total Sales
Percentage Change over 1971
Annual Demand
Vodka
1971
128
136
233
219
716
2455
1972
210
303
275
463
1251
74.72
4289
Gin
1971
51
52
74
157
334
1421
1972
166
142
133
213
654
95.81
2782
Scotch
1971
79
82
151
66
378
800
1972
82
68
66
38
254
-32.80
538
Whiskey
1971
163
180
198
183
724
3096
1972
177
163
162
256
758
4.70
3241
Rum
1971
10
34
44
26
114
449
1972
11
28
61
55
155
35.96
610
Calculations for Setup cost (S):
Size changeover cost = (cost of resetting all machinery for change in bottle size/ avg. no. of different items of given size processed between size changeover) = 23000 / (52X7X10) = $6.3186 per changeover
Label changeover cost = Labour cost incurred while label changeover process = (23000X0.5X8*)/(52X7) + 5X2.5X0.5 = $10.2 per labour changeover
*Assumption each working day is of 8 hrs.
Order Processing cost = 18000/ 350 = $51.43 per order.
All figures in $
Blending Setup Cost
Size changeover cost
Labour changeover cost
Order processing cost
Total setup cost (S)
Blanchard 's 80 proof Vodka
1.15
6.32
10.2
51.43
69.10
Blanchard 's 80 proof Gin
1.08
6.32
10.2
51.43
69.03
MacCoy & MacCoy 86 proof Scotch
3.24
6.32
10.2
51.43
71.19
Triple 7 86 proof Blended