Lorex Pharmaceuticals Memo
Cougar
Consulting
Memo To: Carter Blakely, Manager of Quality Assurance, Lorex Pharmaceuticals
From: Ed Melton, Consultant, Cougar Consulting
CC: Prof. Laura Swanson, Managing Consultant/Professor, Cougar Consulting
Date: 2/12/15
Re: Linatol Fill Rate Analysis and Recommendation
Summary
On August 19th, 2014, Lorex Pharmaceutical requested assistance from Cougar Consulting to help determine the optimal fill rate for their new product Linatol, a cutting edge treatment for patients with high blood pressure.
Lorex Pharmaceutical provided Cougar Consulting two sets of data: 1. An operational budget derived using a
10.2oz fill rate with an 85% acceptance rate and 2. Fill data for 144 samples from the test line set to a 10.2oz fill rate. You asked me to use this data to, systematically, determine the optimal fill rate to minimize under filled bottles (<10oz) and maximize the contribution per case.
According to the report provided to Cougar Consulting, the main problem Lorex faces when trying to determine an optimal fill rate for their product is to reduce the number of exceptions due to an under fill event. An under fill event results in loss of potential revenue due to having to sell it at 80% of wholesale, or $148.80 per case, to a secondary market. Furthermore, additional labor costs are incurred due to the manual packing process required to handle the under filled bottles. The most severe consequence of too many under fill events can result in a whole line stoppage as Lorex has encountered this before with another product. The sections below will report my method of analysis and recommendations to Lorex regarding the optimal fill rate.
Analysis
In the memo requesting the services of Cougar Consulting, you asked for the following three issues, specifically, to be addressed:
•
•
•
What are the relevant costs to be considered in determining the most economic fill level?
How do the statistical parameters related to the outputs from the production
Consulting
Memo To: Carter Blakely, Manager of Quality Assurance, Lorex Pharmaceuticals
From: Ed Melton, Consultant, Cougar Consulting
CC: Prof. Laura Swanson, Managing Consultant/Professor, Cougar Consulting
Date: 2/12/15
Re: Linatol Fill Rate Analysis and Recommendation
Summary
On August 19th, 2014, Lorex Pharmaceutical requested assistance from Cougar Consulting to help determine the optimal fill rate for their new product Linatol, a cutting edge treatment for patients with high blood pressure.
Lorex Pharmaceutical provided Cougar Consulting two sets of data: 1. An operational budget derived using a
10.2oz fill rate with an 85% acceptance rate and 2. Fill data for 144 samples from the test line set to a 10.2oz fill rate. You asked me to use this data to, systematically, determine the optimal fill rate to minimize under filled bottles (<10oz) and maximize the contribution per case.
According to the report provided to Cougar Consulting, the main problem Lorex faces when trying to determine an optimal fill rate for their product is to reduce the number of exceptions due to an under fill event. An under fill event results in loss of potential revenue due to having to sell it at 80% of wholesale, or $148.80 per case, to a secondary market. Furthermore, additional labor costs are incurred due to the manual packing process required to handle the under filled bottles. The most severe consequence of too many under fill events can result in a whole line stoppage as Lorex has encountered this before with another product. The sections below will report my method of analysis and recommendations to Lorex regarding the optimal fill rate.
Analysis
In the memo requesting the services of Cougar Consulting, you asked for the following three issues, specifically, to be addressed:
•
•
•
What are the relevant costs to be considered in determining the most economic fill level?
How do the statistical parameters related to the outputs from the production