Case Study - Shamim Beauty Supplies

You are the Logistics Manager of Shamim Beauty Supplies which is a small manufacturer of beauty products in Mississauga and produces 30 products that have gained a good success in Canadian and US markets. One of Shamim’s successful products is an organic herbal soap that is highly demanded in and regularly shipped to Edmonton, Vancouver, Winnipeg, Montreal and Windsor. Facing such high market demand, Shamim is considering expanding its soap production line, but currently will have to distribute its monthly production between these markets. As a result, Shamim’s shipping schedule is budgeted according to the following table:

Shamim has requested quotes from nine trucking companies out of which four have been shortlisted for contract. The following shows the quotes received from the four trucking companies which are all in dollars per cwt:

Based on the production line expansion plans of the company, the sales department is finalizing long term sales contracts which will increase sales to Vancouver, Edmonton, Winnipeg and Montreal. The projected changes to the sales volumes are summarized in the following table:

	Vancouver	Edmonton	Winnipeg	Montreal
Current Sales ($Mn)	2.585	1.68	1.68	1.071
Future Sales ($Mn)	4.134	2.352	2.52	1.927

Shamim’s VP-Finance projected that the new sales prices offered to secure the above deals would reduce your allocated annual operation budget by $10,122. This means you will have a tighter budget to manage the transportation of products to these markets.

Case Questions:

1. Without considering the changes in production and sales, which one(s) of the transportation companies will you sign contract with for these four markets?
2. How would the new sales affect your shipping plans?
3. How would you adjust your costs to meet the future reduced budget you will have?
   
   

Shipmwnt size 100 lbs 200 lbs 500 lbs 1000 lbs Vancouver Edmonton 5 shipments 4 shipments 4 shipments 4 shipments 4 shipments 5 shipments 4 shipments Destinations Winnipeg 4 shipments 4 shipments 2 shipments 2 shipments Montreal 2 shipments 4 shipments 2 shipments Windsor 2 shipments 3 shipments 3 shipments