Assessment 2 Group Case Study presentation (10%) 

Students are required to form a team of four members. The group needs to pick up a case from those provided in
VU Collaborate and hand in to your lecturer for presentation schedule. The group is expected to prepare a
PowerPoint slides (15 max) describing briefly the issues of the case as well the answer to the questions available
at the end of the case. Each group will be provided with half an hour time for presentation and Q&A session. The
marking may vary for each member in a group depending on the presentation skill and
explanation.  Presentation marking criteria will be based on critical analysis of the case, scholastic of
presentation linking to background theory, teamwork and involvement of audience. Reading out from slides or
notes during presentation is highly discouraged and would be reflected in lower marks. 

Please stick to your presentation schedule and case, failing of which will result in zero mark.

Learning outcome: The ability to work with other team members in presenting a professional case study based
around the cases and the answering the questions at the end.  This assessment will contribute to Learning
Outcomes 1, 2, 3, 5, 6.
Assessment 3 Group Industry Report (30%) 

Groups of four students (same group as in Assessment 2) are required to undertake a detailed analysis of an
assigned case or select a company and submit a report of 2500 to 3000 words. The final report must be
submitted through VU collaborate drop box with similarity index less than 15%.  

 
The case analysis or a company study is to be developed along the following framework:
 
1. Analysis of the existing situation in which three major issues need to be considered:
 
 The physical flow of goods
 The information flows and systems which underpin the flow of goods
 The organizational and management structures which control the supply chain
 Draw a supply chain including the above
 
2. Current performance of distribution:
 The overall performance of the supply chain in terms of both customer service and total logistics
cost
 The relative performance of the supply chain preferably against outside organizations, again in
terms of customer service, total logistics costs, use of state of the art technology, inventory levels
etc.
 The relative performance of individual elements in logistics function like vehicle utilization in
transport operations, stock-turn ratio in inventory management etc. 
3. Logistics in the Business Context:
 Internal corporate policies like thrust on price competitiveness or cost reduction or increase in
productivity or customer service.
 The external business environment e.g. pressures from major customers, price competition from
overseas producers, changes in cost /efficiency of third party contractors.
4. Identify major issues and problems
5. Recommend Solution and Justification
 
You are expected to apply the concepts and/or theories used in the course and additional primary or
secondary research when writing the report. The grade will be based on the relevance and extent of
 research, how effectively basic theories and concepts have been applied and the clarity of the writing and
your particular view point.
 
Project Synopsis: A single page synopsis is due for lecturer’s approval prior to progressing on to major
report writing. The synopsis needs to address the title, brief discussion of company, products and services,
customer, supplIers, a couple of major issues in logistics distribution and methodology (data source i.e. website
and interviews etc.).   

Case 13: Supply Chain Management at Dream Beauty Company

Dream Beauty (DB) Company is a manufacturer of consumer beauty supplies and cosmetics. Based out of Money City,
Nevada, the company services its customers across the U.S. Re- cently, a supply chain expert was elected to the board of
directors. With his insight into supply chain operations, heightened attention was turned toward that area. The costs in this
area have been increasing, and management became very concerned about the issue. The company an- nual sales reached $1
30,000,000 for the fust time since inception. Management believed that some of the increase in supply chain costs may be
attributed to additional sales, but they were confident that other factors existed that needed to be addressed. The situation had
manage- ment's full attention, especially since supply chain costs (and savings for that matter), tlow di- rectly to the bottom
line.

DB supplies its products through three distinct channels: retail stores (direct), convenience stores, and mass merchants. Each
channel is considered an independent profit center with full fi- nancial responsibilities for income statement and balance
sheet. From DB sales, retail accounted for 50 percent, convenience stores for 30 percent, while mass merchants picked up
the remain- ing sales. Cost of goods sold accounted for 40 percent of sales. All three channels seem to be profitable, and
contribute equally to DB, according to the company's cost accountant.

The order fulfillment cycle at DB consists of four areas:

Order Processing Packaging Labeling Delivery

Total Supply Chain-RelatedCosts

Total Cost

$10,000,000 8,000,ooO 2,000,000

$30.000.000 $50,000,000

The total order fulfillment averages 3 days. All orders are processed through a central loca- tion, and delivered from
distribution centers located across the U.S. Usually retail and conve- nience store orders are shipped unlabeled on standard
nonmixed pallets. Mass merchants, on the other hand, have placed a lot of pressure on DB and want the company to take an
active role in helping them manage their inventory. To accommodate this channel, DB has assumed some of the jobbers'
functions in the store and started labeling the orders for mass merchants. To accom- plish that, the company recently
purchased a labeling machine that can process labels at a speed of 30 labelslsecond. The machine's historical value was
determined to be $10,000,000. The company usually depreciates similar equipment on a straight-line basis over a period of 5
years.

The company has a discount policy for all three channels that it services. The net is due in 30 days. While this policy is
explicitly stated on all DB's invoices, retail stores are the only ones that pay according to invoice terms. Mass merchants
usually pay within 15 days, while conve- nience stores usually pay within 45 days. The company's cost accountant reported
that all sales were sold on credit. Cash sales and C.O.D. sales were rare; therefore, they can be ignored for the purpose of this
analysis. DB does not engage in any barter transactions.

The company received a total of 3,600 orders. Retail orders amounted to 1,000; convenience stores to 2,500; and mass
merchants had 100 orders. Each order has a corresponding delivery that is usually completed within the 3-day fulfillment
cycle. The company's practice has been to allocate logistics-related costs to its three channels based on their relative
percentage of sales volume. The orders were shipped in 2,000 packages, with retail accounting for 800 packages,
convenience stores for 1,100 packages and mass merchants for 100 packages. Packaging cost is estimated to be the same
regardless of size. To service these orders, the company has main- tained an inventory safety stock so that it can meet the
level of service that it promises its cus- tomers (the 3-day fulfillment cycle). It is estimated that the company holds an
average of 90 days' inventory for retail, 60 days' inventory for convenience stores, and 40 days' inventory for mass
merchants. The company's cost accountant estimated the total carrying costs of inven- tory to be approximately 15 percent of
total average annual inventory. These costs also include the cost of capital.

The company's customer base in convenience stores includes 13 different stores located in major U.S. cities. Table 1 provides
a breakdown of sales per store, as well as the number of or- ders, and packages for each store.

Historically, DB has offered its customers a level of service that is of the highest standards. One of the fulfillment managers
has been quoted, "We do not discriminate between customers; our 3-day fulfillment cycle in my opinion is becoming an
industry benchmark, and I like it that way. I do not think that our strategy should change in that regard."

The board has some second thoughts about this strategy, and what type of value-added it is generating to the company.

On your first day, you get accustomed to your surroundings, and you become familiar On your first day, you get accustomed
to your surroundings, and you become familiar with the computer system. On your second day, the vice president for supply
chain (and your hiring manager) comes up to you. He proceeds to brief you on a high-level meeting that he just con- cluded
with the top brass at the company. He states that management wants to know why supply chain costs seem skewed, as well
as a full analysis of the three logistical channels that the com- pany employs. Management would like you to answer the
following questions:

1. Analyze the way that current costs are being allocated; what potential changes can you recommend to make the system
more efficient and more accurate?

2. What is the profitability level and return on investment by distribution channel, both under the current and the
recommended allocations?

3. What are your recommendations regarding the company policy of offering all its customers the same service level (3-day
fulfillment cycle)?

Note: The company's cost of capital for both borrowing and lending can be estimated at 9 percent. lgnore tax effects on all
transactions.