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EuroFood Case Analysis Case Solution & Answer

EuroFood Case Analysis

EuroFood was developed by French restaurateur, Mr Vigneau which concentrates in the dispersing and importing of food items from Europe to Hong Kong. EuroFood has actually dealt with a trouble with stock expenses. All the items carried to Hong Kong are delivered either by airplane or through freight boats (channels of circulation). The solely disposable items delivered through planes have no stock documents to be kept. The simply stock of Euro Foods is the items delivered through watercrafts. Consolidated container: Includes items delivered from a team of providers utilizing the very same compartment as a leased center.

History:

EuroFood was developed by French restaurateur, Mr Vigneau that focuses in the dispersing and bring in of food items from Europe towards Hong Kong.EuroFood has actually dealt with a complication with stock expenses. The specifically disposable items delivered through aircrafts have no stock documents to be kept. The only stock of Euro Foods is really the items delivered by means of boats.

  1. Complete Container: Contains items delivered from the exact same provider. Complete container gets about 20 days to deliver from Europe to Hong Kong and expenses 0.5 Hong Kong Dollars per kg
  2. Consolidated container: Contains items delivered from a bunch of providers utilizing the exact same container as a leased center. This delivery takes about 30 days to connect with the consumer and expenses regarding 3 Hong Kong Dollars per kg.

Main Problem:

  1. The present level of stock of Euro Foods deserves $11 million. This is excessive compared with the Olivier Company that has the very same volume of company as Euro Foods using a matching stock level of just $4 million.
  2. The order amount is elevated due to incorrect forecasting which causes high stock expenses
  3. Some items have greater stock expenses than its yearly sales( Eg: The item Carton Peach gets a stock expense of $437,113 and also a yearly sale of $ 253,248 which caused revenues of just $68,377).
  4. Due to greater stock degrees of the items the yearly make money from the particular items are considerably lower compared with items which gets lower stock level.
  5. There are a lot of item classifications (around 200 various items) which has greater stock levels and lower yearly sales( Eg: The item Crozes Hermitage 1984 has $158 yearly sales however the stock level is $2045 and overall earnings is just $47).

Solutions:.

  • Lower the items which has reduced earnings and low yearly sales however high stock expenses( Eg: Crozes Hermitage 1984.
  • Focus on leading sale items like for instance UHT Whipping cream 1 Liter, Portion Butter Unsalted and so on whose yearly sales are simply high compared with stock expenses.
  • Make the projecting of all items more precise by utilizing much better forecasting strategies which can lower the stock level and purchasing amount more precise.
  • Leading sale items like Whipping cream and also Butter needs to bought more regularly based upon the precise projection (utilizing combined container) instead of keeping it due to the fact that these items can spoil quickly.
  • Integrate the items from the exact same provider to minimize the purchasing amount( Eg: Products from Vendor “Besnier” can be integrated into the exact same container).
  • Work out with existing providers to lower the purchasing expense.
  • If settlement with existing providers does not work outside, look for 3rd celebration suppliers to get a lower delivery expense.

Assumption:.

  • The holding expenses and stock expenses impact the earnings of the items.
  • Amount of time where the stock decrease needs to be attained is unimportant( Assumption).
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