Group 07

CASE 11.1: THE ADELAIDE

DAIRY COMPANY
 OUR TEAM

01 02 03
Nguyễn Sang Nhi Thái Lê Hồng Lan Nguyễn Mai Hoàng Thy
Summary + Question 1 Question 2, 3 Question 4, 5, 6, 7

04 05
Nguyễn Ngọc Thanh An Nguyễn Ngọc Hồng Phúc
Question 4, 5, 6, 7 Question 4, 5, 6, 7
 SUMMARY

The Adelaide Dairy Company (ADC) is an Australian

Milk-processing company. Its plant near Adelaide
currently produces infant milk powder for the domestic
market. Recently, ADC won its first international
customer when a retailer in Singapore placed orders for
60,000 3-kilogram ins of milk powder. The company's
initial plan was to package the milk powder in tins at its
plant and ship the tins by sea to Singapore. ADC was
evaluating three options for shipping milk powder from
Adelaide to Singapore.
 SUMMARY
• Option A was to package the milk powder in tins at its plant and ship the tins. The
existing tin design was cylindrical and measured 21 centimeters in diameter and 22
centimeters in height externally.
• Option B involved using a new tin design, so that pallet density could be increased. This
new tin was also cylindrical, but measured 19.4 centimeters in diameter and 24.5
centimeters in height.
• Option C involved first shipping milk powder in bulk (using unpalletized stackable drums
loaded into shipping containers) from Adelaide to Singapore. Each airtight cylindrical
drum, measuring 1 meter in height and 0.75 meter in diameter externally, had a capacity
of 200 kilograms and weighed 32 kilograms when empty. Then, the company could hire a
qualified contractor in Singapore to repackage the milk powder into 3-kilogram tins
identical to the ones in Option A.
 1. How many tins of milk powder can be loaded into a
container under Option A?
The existing tin: A container: Permissible dimensions
• Diameter = 21 cm = 0.21 m • Width = 2.28 m of each pallet:
• Height = 22 cm = 0.22 m • Length = 11.84 m • Width = 1.067 m
• Height = 2.12 m • Length = 1.067 m
• Height = 1 m
 
Each pallet contains:
tins
Each container contains  Total 44 x 100 = 4400 tins

pallets can be loaded in a container.

 2. How many tins of milk powder can be loaded into a
container under Option B?
The new tin design: A container: Permissible dimensions
• Diameter = 19.4 cm = 0.194 m • Width = 2.28 m of each pallet:
• Height = 24.5 cm = 0.245 m • Length = 11.84 m • Width = 1.067 m
• Height = 2.12 m • Length = 1.067 m
• Height = 1 m

Each pallet contains = 100 + 20 = 120 tins

Each container contains = 44 pallets

 Total 44 x 120 = 5,280 tins can be loaded in a container.

 3. How many drums of milk powder can be loaded into a
container under Option C?
The drum: A container:
• Diameter = 0.75 m • Width = 2.28 m
• Height = 1 m • Length = 11.84 m
• Weight = 32 kgs • Height = 2.12 m
• Filling with milk = 232 kgs
 
Each container contains
drums
As the total shipment weight could not exceed 20,000 kgs per container (90 x 232
= 20,880 kgs), each container contains 86 drums (86 x 232 = 19,952 kgs).
4. What are the total costs of delivering the milk powder to the
retailer under Option A?
Total containers for 60,000 3-kilogram tins of milk powder: 60,000/4400 = 14 containers

Cost Option A
ADC’s production + tin (3 x 3) + 3 = $12 60,000 x 12 = $720,000
Pallet $25 14 x 44 x 25 = $15,400
Loaded container $500/container 14 x 500 = $7,000
Freight $2,500/container 14 x 2,500 = $35,000
(720,000 + 15,400 + 7,000 + 35,000)
Insurance 3% the value of the shipment
x 3% = $23,322
Total costs $800,722
5. What are the total costs of delivering the milk powder to the
retailer under Option B?
Total containers for 60,000 3-kilogram tins of milk powder: 60,000/5280 = 12 containers

Cost Option B
ADC’s production + tin (3 x 3) + 3.1 = $12.1 60,000 x 12.1 = $732,000
Pallet $25 12 x 44 x 25 = $13,200
Loaded container $500/container 12 x 500 = $6,000
Freight $2,500/container 12 x 2,500 = $30,000
(732,000 + 13,200 + 6,000 + 30,000)
Insurance 3% the value of the shipment
x 3% = $23,436
Total costs $804,636
6. What are the total costs of delivering the milk powder to the
retailer under Option C?
The company needs 60,000 x 3 = 180,000 kgs (900 drums).
Total 900/86 = 11 containers.

Cost Option C
ADC’s production + drum (3 x 200) + $20 = $620 900 x 620 = $558,000
Loaded container $500/container 11 x 500 = $5,500
Freight $2,500/container 11 x 2,500 = $27,500
(558,000 + 5,500 + 27,500) x 3%
Insurance 3% the value of the shipment
= $17,730
Repackage $2/tin 2 x 60,000 = $120,000
Charge a further $0.5/kg 0.5 x 180,000 = $90,000
Total costs $818,730
 7. Which option would you
recommend? Why?
I think that option A which was to package the
milk powder in tins at its plant and ship the
tins is the best option.
Because option A has the total costs of
delivering the milk powder to the retailer of $
$800,722, whereas option B has the total
costs of $810,198 and total cost of option C is
$818,730. It means option A can load tins of
milk powder for less total costs.
Thank you for listening!