Cheesy Wheezy Essay

Starting as a sm all(prenominal) retail store in New Glarus, Wisconsin, the Cheezy wheezing firm had slowly grown into a chain of nine retail shops located in southern Wisconsin and northern Illinois. In recent years, nearly all its competitors had begun issuing compiles, widely distri moreovered in late October, advertising gift packages of cheeses, jams, jellies, and other fancy food items. Henry Wilson, son of the firms founder, had convinced his gravel that Cheezy Wheezy should besides issue a catalog. It was then March, and the last snows were melting.Henry Wilson had called his third staff meeting in as many weeks to discuss the catalog project. Present were Henry (whose title was vice president) Susan Moore, the sales manager Jeff Bell, the inventory manager and Robert Walker, the traffic manager. Also present was Robert Caldwell, from a Milwaukee-based ad agency that was treatment many aspects of the catalog project. Moore and Caldwell had just finished describing the ca talogs tentative design and the allocation of catalog pages to various product lines.Caldwell then said, We are to the draw where we must design the order form, which depart be stapled inside the center pages. It will be a single 8 1/2-by-11-inch sheet. The customer will remove it from the catalog, complete it, fold it into the envelope shape, lick the gummed lines, and mail it in. The order form will be on one side of the sheet. On the other will be the instructions for folding and Cheezy Wheezys mailing address in New Glarus the remainder of the space will be ads for some impulse items. Right now were thinking of a Santa Clausshaped figure molded out of cheese. Enough of that, said Wilson, this group isnt here to discuss Santa dolls. Were here to design the order form.We may also have to talk a little about selling terms. Susan? Responding to her cue, Moore said, Our biggest difficulty is how to handle the transportation and shipping costs. Weve studied all our competitors ca talogs. Some absorb the costs into the products price, some charge by weight of the order, some charge by money value of order, and some ship COD. How important are shipping costs, Susan? asked Bell. Plenty, was her response. They run $2 to $3 for a 1- or 2-pound package. If you slang a pound of cheese that we sell in our retail stores for $2, here are our costs if it goes by catalog cost of goods, $1 order management, 50 cents overhead, including inventory carrying costs, 50 cents packaging for shipment, 50 cents and transportation costs to any point in the United States ranging between $1. 75 and $3. 20. If, however, were dealing with larger shipments, the relative costs vary. Im not following you, said Wilson. Its like this, responded Moore.The wholesale cost of cheese to us is the same per pound, no matter how much is sold. Order-processing costs are approximately the same for each order well be receiving by mail. Overhead and inventory carrying costs are always present bu t may be allocated in a variety of ways. Packaging costs are also about the same per order. They go up only a few cents as we move to larger cartons. Transportation costs are hard to describe because of their tapers. Right now our whole catalog project is bogged down with the problem of transportation cost tapers. Tapers? said Wilson, turning to Walker. Youve never told me about tapers before. It sounds like some kind of animal. Thats tapir, t-a-p-i-r, said Walker. Were talking about tapers, t-a-p-e-r-s. Oh, said Wilson. What are they? When one ships small packages of cheese, said Walker, rates are based on two factors, the weight being shipped and the distance. As weight or distance increases or boththe rates go up but not as quickly. This is called the tapering principle. To ship 2 pounds of cheese from New Glarus to St. Louis costs $2. 40 3 pounds cost $3. 30 5 pounds cost $4. 60 and so on.One hundred poundsno, 50 pounds is a split example because some of the parcel services well be using wont take 100 pounds50 pounds would cost $21. Theres also a distance taper. The 2-pound shipment that costs $2. 40 to St. Louis is $3. 40 to Denver and $4. 15 to Los Angeles. Cant we use the average transportation costs? asked Bell. Thats what we do with inventory carrying costs. Wont work, said Caldwell. Youll be overpriced for small, short-distance shipments and will lose sales. For heavy long shipments, youll be underpriced and will make so many sales that you might soon go belly up. Wilson shuddered and inquired, Does that mean we charge by weight and by distance? Moore answered, Its not that easy. In the cheese business, people buy by the pound, but shipping weightswhich include packagingare actually more.A customer who orders 3 pounds of cheese is in fact receiving 3 pounds of cheese plus 6 ounces of packaging materials. I wish we could sell a pound of cheese that consisted of 14 ounces of cheese and 2 ounces of packing material, but that would be illegal at worst, and of questionable ethics, at best. We have the same problems with distance, added Walker. Were trying to sell in 50 states, but who knows how far they are from New Glarus? We could have tables and maps in the catalog, but they take up valuable selling space. Also, if it looks too complex, we may just turn mop up some potential customers before they complete their orders. Some of our clients have another problem, added Caldwell, and that is split orders. The customer will want 10 pounds of cheese, but it will be five 2-pound packages sent to five different locations. That has an impact on both packaging and transportation costs. So, what do we do? asked Wilson.