You are the Logistics Manager of Leaf Mens Wear which is a small manufacturer of various products in Mississauga and produces 30 products that have gained a good success in Canadian and US markets. One of Leaf'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, Leaf Mens Wear is considering expanding its soap production line, but currently will have to distribute its monthly production between these markets. As a result, Leaf's shipping schedule is budgeted according to the following table: Shipmwnt size Destinations Vancouver Edmonton Winnipeg Montreal Windsor 100 lbs 5 shipments 4 shipments 4 shipments 2 shipments 2 shipments 200 lbs 4 shipments 4 shipments 4 shipments 4 shipments 3 shipments 500 lbs 4 shipments 5 shipments 2 shipments 2 shipments 3 shipments 1000 lbs 4 shipments 2 shipments Leaf Mens Wearhas 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: |1000 lbs TRANSVERSE SHIPPING CORP $17.28 $14.34 $14.34 $15.94 $12.74 $13.72 $12.88 $12.16 $11.49 $10.89 0-1000 lbs >1000 lbs RAIGNY EXPRESS LTD $24.36 $20.81 $20.81 $19.94 $18.74 $18.72 $18.36 $17.16 $16.43 $15.89 Based on the production line expansion plans of the company, the sales department is finalizing long, term sales contracts which will increase sales to Vancouver, Edmonton, Winnipeg and Montreal. The projected changes to the sales volumes are summarized in the following table: Vancouver Montreal Edmonton 1.68 Winnipeg 1.68 2.585 1.071 Current Sales ($Mn) Future Sales ($Mn) 4.134 2.352 2.52 1.927 Leaf'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. How would you adjust your costs to meet the future reduced budget you will have? You are the Logistics Manager of Leaf Mens Wear which is a small manufacturer of various products in Mississauga and produces 30 products that have gained a good success in Canadian and US markets. One of Leaf'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, Leaf Mens Wear is considering expanding its soap production line, but currently will have to distribute its monthly production between these markets. As a result, Leaf's shipping schedule is budgeted according to the following table: Shipmwnt size Destinations Vancouver Edmonton Winnipeg Montreal Windsor 100 lbs 5 shipments 4 shipments 4 shipments 2 shipments 2 shipments 200 lbs 4 shipments 4 shipments 4 shipments 4 shipments 3 shipments 500 lbs 4 shipments 5 shipments 2 shipments 2 shipments 3 shipments 1000 lbs 4 shipments 2 shipments Leaf Mens Wearhas 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: |1000 lbs TRANSVERSE SHIPPING CORP $17.28 $14.34 $14.34 $15.94 $12.74 $13.72 $12.88 $12.16 $11.49 $10.89 0-1000 lbs >1000 lbs RAIGNY EXPRESS LTD $24.36 $20.81 $20.81 $19.94 $18.74 $18.72 $18.36 $17.16 $16.43 $15.89 Based on the production line expansion plans of the company, the sales department is finalizing long, term sales contracts which will increase sales to Vancouver, Edmonton, Winnipeg and Montreal. The projected changes to the sales volumes are summarized in the following table: Vancouver Montreal Edmonton 1.68 Winnipeg 1.68 2.585 1.071 Current Sales ($Mn) Future Sales ($Mn) 4.134 2.352 2.52 1.927 Leaf'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. How would you adjust your costs to meet the future reduced budget you will have
