It was early January 2014, Ashok Kumar, the general manager of Youreka Hotel, Amritsar (Youreka, Amritsar), was a worried man. The year 2011/12 had been a rollercoaster ride setting up the systems at the five-star hotel, recruiting the staff, selecting the suppliers and marketing the hotel where everything happened simultaneously. The hotel was now up and running and the customers had started checking in, but the challenges, he thought, were not over yet. The results for the October to December 2013 quarter painted a rather grim picture. The hotel industry in India was making double-digit margins, but Youreka, Amritsar had not even achieved operating breakeven yet. The average occupancy of the hotel in the last two quarters was only 31.5 per cent. The hotel was losing potential revenue of about INR600,000 (USD10,000) per day. When Mayank Chawla, the operations head at Youreka, Amritsar, came to Ashok Kumar and said, I have shortlisted the best possible options for the seafood suppliers from across the country (see Exhibit 1) and by evening, I will have finalized the deal with one of them, Kumars reply indicated the agitation in his mind: Mayank, once you are through with that, I need you to review all the processes across each department I never expected such financial results from a hotel with an internationally recognized brand name. I need you to make sure there is no problem unaddressed or any scope of improvement that we have missed. Who should Mayank Chawla select as the long-term seafood supplier for the hotel? And why?

CH Exhibi City State of Transportation Selling Discount Payment Quantity Remarks seafood cost per kg price options terms (in constraints (INR) (INR) (%) days) Amritsar Cleaned 0 350 0.02 15 None Procures the seafood every Monday. So order has to be placed every Sunday morning for the week's requirement. Has large storage capacity. Chandigarh Cleaned 7 600 0.02 13 None Established in 2010. Supplies to a number of hotels in Chandigarh and a few outside the city Delhi Cleaned 10 620 0.05 45 Minimum Started by Indian Institute of order should Management graduates. Cross- be 20 kg, if it docking in Delhi, to be informed in is above 50 the evening for morning delivery kg must give and vice versa. one day prior notice Delhi Cleaned 10 630 0.05 120 Should have Supplies to Youreka, Delhi. Special committed payment terms of 120 days are only business of at for five-star hotels. least 20,000 kg a year Kolkata Raw 15 225 0.02 45 None One of the oldest and most famous suppliers in Kolkata Mumbai Cleaned 17 650 0.04 60 None Supplies to Youreka, Mumbai. Goa Cleaned 17 600 0.02 90 Committed One of the top-rated suppliers in business of at Gon in terms of quality and variety least INR900,000 a month State of seafood In a typical seafood processing process, the fish is cleaned after catching This involves separating the llet from the fish which is around half of the original weight of the fish, Transportation cost: Costs bome to bring to Amritsar railway station. All transport costs are to be borne by the hotel. Selling price Quote made by the supplier for one kilogram of fish Discount options: Bulk discount offered by the supplier. Quantity constraints: Value of minimum order that should be placed with the supplier Cross-docking When inventory is unloaded from inbound trucks and loaded directly into outbound trucks without any storage in between Annual seafood requirement was estimated to be around 20,000 kilograms