fed cost of 100 maled with her. This fucos incurred for onder placement receiving. He also reach thered a holding cost of 20 percent Questions 1. What do you think of the discording scheme that KAR had wed historically? Do you think it was Justod even the 2. One KAR has reduced in fondo per order to 400 real, what are the diraides to leaving the discounting scheme change? 3. What should Carlos set to eat the upcoming meeting What are the potential gains for KAR from the Case Study: Pricing and Delivery at KAR Foods Carlos Ramos, head of supply chain KAR Foods, wondered why his inventories had not defined despite the significant improvement is an ad made in its ability to handle med and allonton from etter. We felt that the problem was the discounting scheme offered by the best to that encouraged customers to pe large cron. Culorged for a meeting with Vanessa Rebels, head of sales and marketing to discuss future plan Historical Pricing and Costs at KAR KAR was a large Brazilian food processing company headquartered in Sao Paulo, that produced fresh and proceduring water, the company had become a major ble her times the world. The company sold its products to several market chaire within wil A typical supermarket chal purchased 10.000 kg of meat cach month ate oferi o KAR KARicarea cost of 2.realg produce the most. KAR operations were set up a produce at sondy rate that matched demand. Historically, KAR had encouraged its customers to order in large lots by offering quantity discount of time tead of religiustomers indeed of 27,500 kr. The quality cows were used by the Night of 4.000 real that was incurred by KAR to proces, dand deliver och der Supply Chain improvements MKAR As the company grow, it became clear that supply chain operations required significant improvement to compete with others that were the market. Carlos Ramos was hired to load this form his extensive experience in the compared industry. A quick review of the sabes que by Carlos identified veral opportunities for improvement. He decided to Som on the large motoflory that was built up to iden. A reduction in ware up capital and expensive cold storage space and would also streamline operations. At the current holding cost of 20 percent, reduction in intresset in overall holding co. He quickly realand that the infertility of the credit to reulted in the high cost of process, boat, and deliver each order. Cochinged processes and invested in tehnology to increase flexibility and make it deperto landle med os. He showing of that made easier to plan deliveries to multiple content on a single track. This thelped reduce the fined cost per customer oder down to real. Carlos hoped these imponents would significantly reduce lote and thus, inventary Costs Faced by Customers Given that there was very decrease in lead inventories, Carlos wwted to understand why things had not changed. Before his meeting with messa, heght to learn about the cous feed by supermarket chains ofering from KAR Foods Helmed that each supermarket chain if incurred a Case Study: Pricing and Delivery at KAR Foods Carlos Ramos, head of supply chain at KAR Foods, wondered why his inventories had not declined despite the significant improvement his team had made in its ability to handle mixed-load and small lot orders from customers. He felt that the problem was the discounting scheme offered by the sales team that encouraged customers to place large orders. Carlos arranged for a meeting with Vanessa Rebelo, head of sales and marketing, to discuss future plans. Historical Pricing and Costs at KAR KAR was a large Brazilian food processing company, headquartered in So Paulo, that produced fresh and processed meats. Starting as a slaughterhouse, the company had become a major global player after several acquisitions across the world. The company sold its products to several supermarket chains within Brazil. A typical supermarket chain purchased 10,000 kg of meat each month at a price of 4 real/kg from KAR. KAR incurred a cost of 2.50 real/kg to produce the meat. KAR operations were set up to produce at a steady rate that matched demand. Historically, KAR had encouraged its customers to order in large lots by offering quantity discounts of 2 percent (a price of 3.92 real/kg instead of 4 real/kg) if customers ordered lots of 27,500 kg or more. The quantity discounts were justified by the high fixed cost of 4,000 real that was incurred by KAR to process, load and deliver each order. Supply Chain Improvements at KAR As the company grew, it became clear that supply chain operations required significant improvement to compete with other multinationals that were entering the Brazilian market. Carlos Ramos was hired to lead this effort, given his extensive experience in the consumer packaged goods industry. A quick review of the status quo by Carlos identified several opportunities for improvement. He decided to focus on the large amount of inventory that was built up to fill customer orders. A reduction in inventory would free up capital and expensive cold storage space, and would also streamline operations. At the current holding cost of 20 percent, reduction in inventories could save a significant amount in overall holding costs. He quickly realized that the inflexibility of the current distribution system resulted in the high cost of 4,000 real to process, load, and deliver each order. Carlos changed processes and invested in technology to increase flexibility and make it cheaper to handle mixed loads. He also brought in routing software that made it easier to plan deliveries to multiple customers on a single truck. This helped reduce the fixed cost per customer order down to 400 real. Carlos hoped that these improvements would significantly reduce lot sizes and, thus, inventory. Costs Faced by Customers Given that there was very little decrease in lot sizes and inventories, Carlos wanted to understand why things had not changed. Before his meeting with Vanessa, he sought to learn about the costs faced by supermarket chains ordering from KAR Foods. He learned that each supermarket chain itself incurred a fixed cost of 100 real associated with each order. This fixed cost was incurred for order placement and receiving. He also learned that each supermarket chain incurred a holding cost of 20 percent. Questions 1. What do you think of the discounting scheme that KAR had used historically? Do you think it was justified given the circumstances? 2. Once KAR has reduced its fixed cost per order to 400 real, what are the downsides to leaving the discounting scheme unchanged? 3. What should Carlos suggest to Vanessa at the upcoming meeting? What are the potential gains for KAR from this suggestion? Case Study: Pricing and Delivery at KAR Foods Carlos Ramos, head of supply chain at KAR Foods, wondered why his inventories had not declined despite the significant improvement his team had made in its ability to handle mixed-load and small lot orders from customers. He felt that the problem was the discounting scheme offered by the sales team that encouraged customers to place large orders. Carlos arranged for a meeting with Vanessa Rebelo, head of sales and marketing, to discuss future plans. Historical Pricing and Costs at KAR KAR was a large Brazilian food processing company, headquartered in So Paulo, that produced fresh and processed meats. Starting as a slaughterhouse, the company had become a major global player after several acquisitions across the world. The company sold its products to several supermarket chains within Brazil. A typical supermarket chain purchased 10,000 kg of meat each month at a price of 4 real/kg from KAR. KAR incurred a cost of 2.50 real/kg to produce the meat. KAR operations were set up to produce at a steady rate that matched demand. Historically, KAR had encouraged its customers to order in large lots by offering quantity discounts of 2 percent (a price of 3.92 real/kg instead of 4 real/kg) if customers ordered lots of 27,500 kg or more. The quantity discounts were justified by the high fixed cost of 4,000 real that was incurred by KAR to process, load and deliver each order. Supply Chain Improvements at KAR As the company grew, it became clear that supply chain operations required significant improvement to compete with other multinationals that were entering the Brazilian market. Carlos Ramos was hired to lead this effort, given his extensive experience in the consumer packaged goods industry. A quick review of the status quo by Carlos identified several opportunities for improvement. He decided to focus on the large amount of inventory that was built up to fill customer orders. A reduction in inventory would free up capital and expensive cold storage space, and would also streamline operations. At the current holding cost of 20 percent, reduction in inventories could save a significant amount in overall holding costs. He quickly realized that the inflexibility of the current distribution system resulted in the high cost of 4,000 real to process, load, and deliver each order. Carlos changed processes and invested in technology to increase flexibility and make it cheaper to handle mixed loads. He also brought in routing software that made it easier to plan deliveries to multiple customers on a single truck. This helped reduce the fixed cost per customer order down to 400 real. Carlos hoped that these improvements would significantly reduce lot sizes and, thus, inventory Costs Faced by Customers Given that there was very little decrease in lot sizes and inventories, Carlos wanted to understand why things had not changed. Before his meeting with Vanessa, he sought to learn about the costs faced by supermarket chains ordering from KAR Foods. He learned that each supermarket chain itself incurred a 1 fixed cost of 100 real associated with each order. This fixed cost was incurred for order placement and receiving. He also learned that each supermarket chain incurred a holding cost of 20 percent. Questions 1. What do you think of the discounting scheme that KAR had used historically? Do you think it was justified given the circumstances? 2. Once KAR has reduced its fixed cost per order to 400 real, what are the downsides to leaving the discounting scheme unchanged? 3. What should Carlos suggest to Vanessa at the upcoming meeting? What are the potential gains for KAR from this suggestion? fed cost of 100 maled with her. This fucos incurred for onder placement receiving. He also reach thered a holding cost of 20 percent Questions 1. What do you think of the discording scheme that KAR had wed historically? Do you think it was Justod even the 2. One KAR has reduced in fondo per order to 400 real, what are the diraides to leaving the discounting scheme change? 3. What should Carlos set to eat the upcoming meeting What are the potential gains for KAR from the Case Study: Pricing and Delivery at KAR Foods Carlos Ramos, head of supply chain KAR Foods, wondered why his inventories had not defined despite the significant improvement is an ad made in its ability to handle med and allonton from etter. We felt that the problem was the discounting scheme offered by the best to that encouraged customers to pe large cron. Culorged for a meeting with Vanessa Rebels, head of sales and marketing to discuss future plan Historical Pricing and Costs at KAR KAR was a large Brazilian food processing company headquartered in Sao Paulo, that produced fresh and proceduring water, the company had become a major ble her times the world. The company sold its products to several market chaire within wil A typical supermarket chal purchased 10.000 kg of meat cach month ate oferi o KAR KARicarea cost of 2.realg produce the most. KAR operations were set up a produce at sondy rate that matched demand. Historically, KAR had encouraged its customers to order in large lots by offering quantity discount of time tead of religiustomers indeed of 27,500 kr. The quality cows were used by the Night of 4.000 real that was incurred by KAR to proces, dand deliver och der Supply Chain improvements MKAR As the company grow, it became clear that supply chain operations required significant improvement to compete with others that were the market. Carlos Ramos was hired to load this form his extensive experience in the compared industry. A quick review of the sabes que by Carlos identified veral opportunities for improvement. He decided to Som on the large motoflory that was built up to iden. A reduction in ware up capital and expensive cold storage space and would also streamline operations. At the current holding cost of 20 percent, reduction in intresset in overall holding co. He quickly realand that the infertility of the credit to reulted in the high cost of process, boat, and deliver each order. Cochinged processes and invested in tehnology to increase flexibility and make it deperto landle med os. He showing of that made easier to plan deliveries to multiple content on a single track. This thelped reduce the fined cost per customer oder down to real. Carlos hoped these imponents would significantly reduce lote and thus, inventary Costs Faced by Customers Given that there was very decrease in lead inventories, Carlos wwted to understand why things had not changed. Before his meeting with messa, heght to learn about the cous feed by supermarket chains ofering from KAR Foods Helmed that each supermarket chain if incurred a Case Study: Pricing and Delivery at KAR Foods Carlos Ramos, head of supply chain at KAR Foods, wondered why his inventories had not declined despite the significant improvement his team had made in its ability to handle mixed-load and small lot orders from customers. He felt that the problem was the discounting scheme offered by the sales team that encouraged customers to place large orders. Carlos arranged for a meeting with Vanessa Rebelo, head of sales and marketing, to discuss future plans. Historical Pricing and Costs at KAR KAR was a large Brazilian food processing company, headquartered in So Paulo, that produced fresh and processed meats. Starting as a slaughterhouse, the company had become a major global player after several acquisitions across the world. The company sold its products to several supermarket chains within Brazil. A typical supermarket chain purchased 10,000 kg of meat each month at a price of 4 real/kg from KAR. KAR incurred a cost of 2.50 real/kg to produce the meat. KAR operations were set up to produce at a steady rate that matched demand. Historically, KAR had encouraged its customers to order in large lots by offering quantity discounts of 2 percent (a price of 3.92 real/kg instead of 4 real/kg) if customers ordered lots of 27,500 kg or more. The quantity discounts were justified by the high fixed cost of 4,000 real that was incurred by KAR to process, load and deliver each order. Supply Chain Improvements at KAR As the company grew, it became clear that supply chain operations required significant improvement to compete with other multinationals that were entering the Brazilian market. Carlos Ramos was hired to lead this effort, given his extensive experience in the consumer packaged goods industry. A quick review of the status quo by Carlos identified several opportunities for improvement. He decided to focus on the large amount of inventory that was built up to fill customer orders. A reduction in inventory would free up capital and expensive cold storage space, and would also streamline operations. At the current holding cost of 20 percent, reduction in inventories could save a significant amount in overall holding costs. He quickly realized that the inflexibility of the current distribution system resulted in the high cost of 4,000 real to process, load, and deliver each order. Carlos changed processes and invested in technology to increase flexibility and make it cheaper to handle mixed loads. He also brought in routing software that made it easier to plan deliveries to multiple customers on a single truck. This helped reduce the fixed cost per customer order down to 400 real. Carlos hoped that these improvements would significantly reduce lot sizes and, thus, inventory. Costs Faced by Customers Given that there was very little decrease in lot sizes and inventories, Carlos wanted to understand why things had not changed. Before his meeting with Vanessa, he sought to learn about the costs faced by supermarket chains ordering from KAR Foods. He learned that each supermarket chain itself incurred a fixed cost of 100 real associated with each order. This fixed cost was incurred for order placement and receiving. He also learned that each supermarket chain incurred a holding cost of 20 percent. Questions 1. What do you think of the discounting scheme that KAR had used historically? Do you think it was justified given the circumstances? 2. Once KAR has reduced its fixed cost per order to 400 real, what are the downsides to leaving the discounting scheme unchanged? 3. What should Carlos suggest to Vanessa at the upcoming meeting? What are the potential gains for KAR from this suggestion? Case Study: Pricing and Delivery at KAR Foods Carlos Ramos, head of supply chain at KAR Foods, wondered why his inventories had not declined despite the significant improvement his team had made in its ability to handle mixed-load and small lot orders from customers. He felt that the problem was the discounting scheme offered by the sales team that encouraged customers to place large orders. Carlos arranged for a meeting with Vanessa Rebelo, head of sales and marketing, to discuss future plans. Historical Pricing and Costs at KAR KAR was a large Brazilian food processing company, headquartered in So Paulo, that produced fresh and processed meats. Starting as a slaughterhouse, the company had become a major global player after several acquisitions across the world. The company sold its products to several supermarket chains within Brazil. A typical supermarket chain purchased 10,000 kg of meat each month at a price of 4 real/kg from KAR. KAR incurred a cost of 2.50 real/kg to produce the meat. KAR operations were set up to produce at a steady rate that matched demand. Historically, KAR had encouraged its customers to order in large lots by offering quantity discounts of 2 percent (a price of 3.92 real/kg instead of 4 real/kg) if customers ordered lots of 27,500 kg or more. The quantity discounts were justified by the high fixed cost of 4,000 real that was incurred by KAR to process, load and deliver each order. Supply Chain Improvements at KAR As the company grew, it became clear that supply chain operations required significant improvement to compete with other multinationals that were entering the Brazilian market. Carlos Ramos was hired to lead this effort, given his extensive experience in the consumer packaged goods industry. A quick review of the status quo by Carlos identified several opportunities for improvement. He decided to focus on the large amount of inventory that was built up to fill customer orders. A reduction in inventory would free up capital and expensive cold storage space, and would also streamline operations. At the current holding cost of 20 percent, reduction in inventories could save a significant amount in overall holding costs. He quickly realized that the inflexibility of the current distribution system resulted in the high cost of 4,000 real to process, load, and deliver each order. Carlos changed processes and invested in technology to increase flexibility and make it cheaper to handle mixed loads. He also brought in routing software that made it easier to plan deliveries to multiple customers on a single truck. This helped reduce the fixed cost per customer order down to 400 real. Carlos hoped that these improvements would significantly reduce lot sizes and, thus, inventory Costs Faced by Customers Given that there was very little decrease in lot sizes and inventories, Carlos wanted to understand why things had not changed. Before his meeting with Vanessa, he sought to learn about the costs faced by supermarket chains ordering from KAR Foods. He learned that each supermarket chain itself incurred a 1 fixed cost of 100 real associated with each order. This fixed cost was incurred for order placement and receiving. He also learned that each supermarket chain incurred a holding cost of 20 percent. Questions 1. What do you think of the discounting scheme that KAR had used historically? Do you think it was justified given the circumstances? 2. Once KAR has reduced its fixed cost per order to 400 real, what are the downsides to leaving the discounting scheme unchanged? 3. What should Carlos suggest to Vanessa at the upcoming meeting? What are the potential gains for KAR from this suggestion