Blanchard Imports

9-673-033 Blanchard Importing and Distribution Co., Inc. HBSP 12pp. Teaching Note AvailableAnnotation - Illustration of the two main types of errors resulting from use of the economic order quantity (EOQ) as a tool in productionscheduling. Designed to permit class discussion to begin with a consideration of one common type of mistake, errors in calculation of the EOQ volume resulting from use of incorrect data for the input parameters of the formula. The analysis can then shift to a more general discussion of the second type of error, the misapplication of EOQ and re-order point (ROP) techniques to a given system. Class discussion can conclude with student recommendations of alternative techniques which may be better suited to the Blanchard operation than the EOQ/ROP method.

SESSION 19: THE ROLE OF INVENTORY - THE TRADITIONAL VIEW 1. Read Chapter 14 in CAJ. 2. Although the EOQ/ROP (or more appropriately, ELS) system may not be appropriate for Blanchard because of the inapplicability of the basic theoretical assumptions, it is of interest to consider the operational feasibility of an EOQ/ROP system. Select Blanchard Vodka in quarts as an example product, and calculate the ELS for this product. 3. What would be the inventory policy that would result from this calculation?4. SUBMIT AS SHORT PAPER #8To perform an EOQ or ELS calculation you must first determine which costs should be included. List each of the costs which comprise the Unit Cost (C) and Set-up Cost (S) for Blanchard, and indicate whether or not each of the costs should be included in the calculation for EOQ(or ELS) for vodka in quarts. Include a brief reason for each answer (one or two sentences). List in setup costs: blending setup, size changeover, label changeover and order processing costs. List in unit costs: materials beverage, materials packaging, bottling labor, fixed overhead, variable overhead, state tax, federal distilled spirits tax, federal rectification tax and customs duty.