- Michelle Is Johnson Johnson S Walmart Account Manager Meaning That She Observes All Operational Interactions Between 1 (86.31 KiB) Viewed 23 times
ways to streamline the flow of product through the supply chain.
One way to do so would be to ship only in tier quantities. If each
order to the store was for a single tier, then the tier could be
created in J&J’s warehouse. The tier would then be shipped to
Walmart’s distribution center to the supercenter. Rafael agrees
that a tier quantity might help the rest of the supply chain, but
he fears that it would be costly to order one tier at a time for
this supercenter. Are Rafael’s concerns justified?
Hints: • You have to compare the costs of a tier quantity (= 24
cases) with that of the EOQ.
Michelle is Johnson & Johnson's Walmart account manager, meaning that she observes all operational interactions between Walmart and Johnson & Johnson. The Walmart account is so important to J&J that Michelle actually lives in Bentonville, Arkansas, which is where Walmart's corporate headquarters is located. Rafael works for Walmart and is Michelle's main contact person. Rafael was concerned that Walmart was not purchasing as efficiently from J&J as it could, so he arranged for a meeting with Michelle to discuss their strategy. To focus the conversation, Rafael suggested they look at one product, Listerine Cool Mint 250ml. Table 1 reports sales data for that product in one of Walmart's stores over a 30-week period. Table 2 provides data on demand, ordering costs, etc. for this product. Table 1. Weekly sales of Listerine Cool Mint 250 ml at one Walmart Supercenter Week Sales Week Sales Week Sales 21 22 23 18 1 2 16 9 10 9 3 4 5 6 7 8 9 10 19 15 12 15 17 13 8 9 11 12 13 14 15 16 17 18 19 20 5 6 7 11 10 10 24 25 26 27 28 29 30 11 10 12 13 19 14 13 18 18 15 7 Table 2. Information regarding demand, ordering costs, etc. for Listerine Cool Mint 250 ml Purchase price per unit Annual holding cost percentage Fixed ordering cost Average weekly sales (units) Units per case Cases per tier Tiers per pallet Lead time Service level $2.5 25% $6 12.3 12 24 5 4 weeks 95%