Edwards Shoes, Inc. Case
Edwards Shoes, Inc. CaseEla CleofeJd DilidiliJoem FuloAngel
Villanueva
Edwards Shoes, Inc.A shoe producer holding company founded by
Edna Smith and Ward MooreWhats a Shoe Producer Holding Company?- A
holding company that owns shoe producers and ships shoes to
strategically located warehouses. These warehouses would each
become distributing centers focused on presenting a complete line
of shoes with a selection of brand names to retails customers Owned
4 Shoe Manufacturing Concerns located at:Rockford, IllinoisBoston,
MassachusettsOmaha, NebraskaDenver, Colorado Owned 8 Warehouses
located at:Atlanta, GeorgiaMorgan Hill, CaliforniaRaleigh, North
CarolinaTrenton, New JerseyMadison, WisconsinHouston,
TexasManchester, New HampshireLouisville, Kentucky
Edwards Shoes, Inc. Owned 4 Shoe Manufacturing Concerns located
at:Rockford, IllinoisBoston, MassachusettsOmaha, NebraskaDenver,
Colorado Owned 8 Warehouses located at:Atlanta, GeorgiaMorgan Hill,
CaliforniaRaleigh, North CarolinaTrenton, New JerseyMadison,
WisconsinHouston, TexasManchester, New HampshireLouisville,
Kentucky
LEGEND:
Shoe Manufacturer
Warehouse
Edwards Shoes, Inc. Year 1994 Sales by Operations: $ 240M Year
1994 Net Profit: $ 25.9M (10.8% of sales)
Table 23-1
Edwards Shoes, Inc. Packing of shoes is done by the 4 producers
in sets of 12 pairs, 24 pairs, or 36 pairs per cartonTransportation
costs components:Weight of packed shipping cartonsDistance the
cartons are transportedNo. of cartons shipped
Edwards Shoes, Inc.Transportation charges of the transportation
company are based on:Distance (according to zone)WeightAn outside
transportation company ships the shoes to the 8 warehouses
Edwards Shoes, Inc.
Table 23-2
Edwards Shoes, Inc.
Table 23-3
Edwards Shoes, Inc.
Table 23-4
Edwards Shoes, Inc.Table 23-5
Edwards Shoes, Inc.Table 23-6
Edwards Shoes, Inc.Table 23-7
Case Questions:1. Prepare a table showing the number of cartons
and the appropriate cost per carton, shipped by each of the four
producers to each of the eight warehouses during 1994
Case Questions:2a. Prepare a table based on data from the table
created for Question 1, showing the total actual cost incurred for
each of the four producers to ship shoes to each of the eight
warehouses during 1994
Case Questions:2b. Prepare a table based on data from the table
created for Question 1, showing the total actual cost incurred for
each warehouse to receive shoes from each of the four producers
Case Questions:3a. Prepare a table similar to the tables created
for Question 2, showing the lowest possible costs for each of the
four producers to ship shoes to each of the eight warehouses during
1994
Case Questions:3b. Prepare a table similar to the tables created
for Question 2, showing the lowest possible costs for each
warehouse to receive shoes from each of the four producers
Case Questions:4. Prepare a comparative analysis of the two
tables from Question 3, showing dollar and percentage
differences.
Case Questions:5. Due to rising costs, competition, and economic
times, the holding companys management has decided that one of the
four producers must be closed in a near future year to save
transportations costs and that the shoes made in 1994 by the
soon-to-be-closed producer be allocated proportionately to the
three remaining producers. Assume that the total number of pairs of
shoes shipped and the number of shoes received by each of the
warehouses will decrease by 10% from the figures for 1994. Which
producer, if any, do you recommend be closed to save transportation
costs? (For the sake of consistency, use 1994 shipping data and
costs).
Case Questions:6. Should the decision to close one of the shoe
producers be based solely on saving transportation costs? What
other criteria, if any, should also be considered?
