WESTERN RANCHMAN

OUTFITTERS (WRO)
C A S E S T U D Y P R E S E N T E D B Y,

K A L A I VA N A N R
INTRODUCTION
• Western Ranchman outfitters (WRO), a family-owned and operated mail order and retail store
business in Cheyenne, Wyoming, bills itself as "The Nation's Finest Western Store" and carries
high-quality western apparel and riding supplies.
• President – Mr. Veta
• Director of Merchandising - Don Randell
• One of the WRO’s most staple item is the button front , shrink to fit blue jean made by levi’s
Strauss. It is still an popular jean.
ABOUT CASE
STUDY
• The Director of Merchandising Mr. Don Randell always
records the annual usage, and we can see that the
quantity received from the Levi jeans will always be
lesser than quantity ordered.

• Its because the uncertainty of the supplier. The store

always keeps adequate stock for 60 days because of the
production problems of the supplier and a hedge against
usually large orders.

• So, the case question is to evaluate Randell's ordering

policy. And how does it compare with formal
mathematical approach?
 FORMAL
M AT H E M AT I C A
L APPROACH
EOQ
• The EOQ for a yearly demand of 2,000-unit, order cost of $10.00, and holding cost of
0.12(10.05) = $1.206 is

• The solution recommends 2,000/182 = 11 orders to be submitted per year; WRO orders
monthly. The EOQ is about 182 pairs, as compared to 167 ordered monthly. The annual cost
difference is minimal.
 • There is one remaining problem that the model doesn’t solve, but
which Mr. Randell has.
• That is the problem of the unreliability of the supplier. By
ordering one extra time (12 orders per year instead of 11)
and by ordering extra quantities judiciously, Mr. Randell has
RANDELL managed to keep WRO almost totally supplied with the
ORDERING requisite number of Levis 501.

POLICY • Further, because the actual solution is so close to the

model solution, and because we have seen that the EOQ is a
robust model, it lacks flexibility.
CONCLUSION
• By evaluating Randell’s ordering policy, he is keeping his inventory goals close to the
minimum while still meeting his goal of avoiding stockouts.
• The Randell’s ordering policy is good because he actually calculated the EOQ and made minor
adjustments to compensate the unreliability of the manufacturer.
THANKYOU