Final Exam - LP (25 pts) Word References Mailings Review View Tell me what you w

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Final Exam - LP (25 pts) Word References Mailings Review View Tell me what you want to do Product Mix LM. Nuts, Inc., makes three nut mixes for sale to grocery chains located in the Pacific Northwest. The three mixes, referred to as the Regular Mix, the Deluxe Mix, and the Holiday Mix, are made by mixing different percentages of five types of nuts In preparation for the Fall Season, October -December, L.M. Nuts, Inc., purchased the following shipments of nuts at the prices shown: Type of Nut Almond Brazil Filbert Pecan Walnut Shipment Amount (lbs) Cost per Shipment 7,500 7,125 7500 7500 6000 $7,200 7500 Note that the cost of the five shipments of muts is a sink (not a relevant) cost and should not affect the decision. However, this information may be useful to management in ficture pricing and purchasing decisions. Each I.M. Nuts, Inc., mix (i.e., Regular, Deluxe and Holiday) are comprised of the five types of nuts shown above, with the following composition or combination: Ingredient Contribution (%) Type of Mix Almond Brazil Filbert Pecan Walnut 15 20 25 20 15 25 20 15 25 20 20 Deluxe 25 The Accounting Department analyzed the product cost (ie., production, packaging materials, orders, inventory, etc.) and sales price per pound, and determined that the profit contribution per pound is $1.65 for the Regular Mix, $2.00 for the Deluxe Mix, and $2.25 for the Holiday Mix. These figures do not include the cost of specific types of nuts in the different mixes because that cost can vary greatly in the commodity markets. Because demand is running high, I.M. Nuts, Inc., expects to receive many more orders than can be satisfied. Customer orders already received (in lbs): Regular-10,000; Deluxe-3,000; Holiday-5,000. 1.M. Nuts, Inc., is committed to using the available nuts to maximize profit over the Fall Season, October - December. Nuts not used will be given to local food shelters. Even if it is not profitable to do so, the President of I.M. Nuts, inc., the head nut, indicated that the orders already received must be satisfied Perform an analysis of the 1.M. Nuts, Inc., product mix problem.

Explanation / Answer

Crocs: Revolutionizing an Industry’s Supply Chain Model for Competitive Advantage by Michael Marks
The case highlights how Crocsdeveloped an “extremely flexible supply chain” that allows it to “adjust to changes in the marketplace” thus enabling its rapid and highly-profitable growth. In the first quarter of 2007, near the time the case was written, Crocs reported revenues of $142 million and net income of $0.61 per share.

This case discusses the astounding growth of Crocs, Inc., a manufacturer of plastic shoes, from 2003 through early 2007. Much of the company’s growth was made possible by a highly flexible supply chain which enabled Crocs to build additional product within the selling season. The normal model used within the fashion industry was to take orders well in advance of each selling season, and produce to those orders, with relatively little additional production. If demand was far in excess of this production, there would be stockouts and the company would lose the ability to capture revenue for that season. The product might, or might not, be in fashion the following year, when production would again be based on pre-season orders.

Crocs’ ability to build additional shoes within the season enabled it to take advantage of strong customer demand, resulting in the company filling in-season orders totaling many times that of the initial pre-booked orders. The case describes the Crocs supply chain. It asks students to assess the company’s core competencies and how those can be exploited in the future.

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