Case Study on Miracle-mind Company
Transcript of Case Study on Miracle-mind Company
ByNivedita - 09020241076 Mansi - 09020241087 Dylan - 09020241072Vivek S - 09020241094 Vivek K - 09020241102Terry R - 09020241101
Whole Sale distributor of bicycles and bicycle parts. Its primary retail outlets are located within an area
of 1000 sq km. i.e. a radius of approx 18 km. Receives all its bicycles of different models from a
single manufacturer in China. The major selling model of bicycle at Miracle Mind is
the “ Road King”.
n
Miracle Mind Company
(distributor)
Manufacturer in China
Retail outlets
Alternate distributor of bicycles
Step 1: Order placed
Order dispatched in 2 days
Is stock available
?
YES
NO
Retailer informed, & he places the order with an alternate distributor
Shipment received in 4 to 4.5 weeks
Shipment of orders from China to MC takes 4 to 4.5 weeks
Order Cost: Rs. 1000 per order Purchase price per order by MC: 75% of MRP for all models ~ Rs 900 Inventory Carrying Cost: 20% of the purchase price
per year. Average Retail Price for Road King: Rs. 1200
Months Actual Sales for 2003
Actual sales for 2004
Predicted demand for 2005
January 1216 1217 1218
February 1222 1224 1225
March 1234 1238 1241
April 1240 1245 1255
May 1260 1270 1278
June 1239 1234 1250
July 1235 1244 1251
August 1236 1235 1239
September 1228 1231 1230
October 1218 1231 1254
November 1225 1230 1235
December 1230 1235 1245
The predicted Annual Demand for 2005: 14921 Order Cost: 1000 per order Purchase Price : Rs. 900 Avg. retail Price: Rs. 1200 Inventory Carrying Cost: 20% of (14921*1200)
To maintain a 99% service level with its customers to minimize losses on lost orders.
1) Issues from SCM point of view?
2) How to resolve these issues?
3) To develop a comprehensive supply chain strategy for MC.
The inventory management is not efficient as orders are lost due to unavailability of stock.
No back up order.
A Probable lack of required storage capacity.
Insufficient information exchange with the retailers.
Lack of consistent fulfillment of Retailer demand might result in diminished retailer loyalty.
Lack of proper understanding of Retailer requirements.
High delivery time from manufacturer (china) to
MC.
To increase the inventory in proportion to the order loss by determining order fulfillment ratio.
To increase the Storage capacity &order frequency with the manufacturer.
To have a daily exchange of information with retailer through online communication.
To determine the Segregated demand of bicycles model-wise, area-wise and creation of forecast database.
To plan the inventory of fast and slow moving models.
Information:To improve the information exchange between the retailer and distributor in terms of bi-weekly demand requirements.
To use demand forecasting tools which may calculate demand on quarterly, half yearly, yearly averages etc.
Transportation: To reduce the delivery time from MC to retailer by bucketing the orders and using milk-van run.
The retailer should keep a buffer stock to satisfy any excess demands immediately(as 99% service level is to be achieved i.e. 6 sigma).
In order to avoid loses due to lack of stock, the order frequency needs to be improved with the help of the information received in the monthly sales report of the retailers.
Contingency plan should be incorporated in case of transport strikes, dock strikes etc.