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Case Study: Pricing Perishable Products
Instructions - Read the case below and use the data provided to answer the questions in the case. You may use a calculator. Once you have answered the questions, you will prepare a short, 5 to 8 slide presentation that will be presented during the interview. You can consider including the following items, but you are free to present any aspects of the case you wish:
- Key facts and important aspects
- Risks and issues
- Next steps
- Other considerations or information needed
Case Overview - John Kline, the pricing manager of Prime Foods, a food distribution company in Texas is trying to come up with a better process of coordinating pricing for his customers along with the perishability aspect of the products he is managing. Prime Foods has been in business for a long time and they specialize in processed foods including frozen pizzas, frozen veggies as well as some deli meats. They cater to small and mid-size grocery stores across the state.
The first thing he realized was that he needed some data to investigate the current situation and come up with a plan. He reached out to the IT department, and he found out he could get the following information:
- Visibility into the inventory levels for all the distribution centers as well as the current shelf life for all products in-stock. This is possible by tracking the product's lot number with the manufactured date, tracking the product life cycle and then calculating the remaining shelf life.
- Transactional data that included sales for the month of October. With this information he is able to answer the following: Which products have been sold, how much quantity, at what price and to whom? He has the ability to extract all the invoices for a given time period.
- Volume targets for each product and distribution center. The sales leadership has come up with certain volume targets they would like to hit broken down to the monthly level. These targets were derived from historical information along with corporate strategy (e.g. brand positioning, competitor pressure, etc.).
John is trying to leverage all this data in order to come up with a better pricing strategy that is in-line with the corporate goals but also takes in consideration the inventory in order to avoid spoilage.
1. Which product(s) are at risk to perish before being sold?
2. Which product(s) are under-sold / over-sold? What other insights can you derive from the targets that have been set by the sales leadership?
3. From a pricing standpoint what can be done to minimize the spoilage?
4. What conclusions can you draw from their historical transactions?
5. Assuming the data was extracted on October 23rd 2015, how would you forecast the amount of product that will be sold at the end of the month? How is this information relevant? (Hint)
6. Any other supply chain considerations?
Note - Words: As appropriate to the answer. Present it in a project format short, 5 to 8 slide presentation.
Attachment:- Case Study.rar