Chard Appliances

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# Chard Appliances - PowerPoint PPT Presentation

Chard Appliances. Becca Carlson Bethany Haefner Jack Lim Liang Wen. Opportunity to increase annual revenue by 20% to \$137M. Chard’s Annual Revenue. \$137M. Opportunity +\$23M. \$114M. Agenda. The Problem The Root Cause The Solution Conclusion. Problem: Underselling Market Potential.

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Presentation Transcript

Chard Appliances

Becca Carlson

Bethany Haefner

Jack Lim

Liang Wen

Opportunity to increase annual revenue by 20% to \$137M

Chard’s Annual Revenue

\$137M

Opportunity

+\$23M

\$114M

Agenda
• The Problem
• The Root Cause
• The Solution
• Conclusion
Problem: Underselling Market Potential
• If Chard Appliance would have retained market share it had in 1981, sales would have grown to over \$250 million in 1993

Expected

Actual

\$47.7M sales opportunity was lost

Appliance Units Demanded vs. Sold

Units

Demanded

256,821

181,173

Sold

\$47.7M

Missed sales

Week

What affects how much we sell?

Dependent Variable

Independent Variables

“Perfect World” Solution

• Decreased OCV by 100%,
• Unit Sold: +37%; +67,173 units
• Fill Rate: +26%
• Revenue : +37%; +\$42,298,829

Optimized Solution

• Minimum OCV – 2.82 (25%) and \$560 (-11%)
• Unit Sold - +35% (63,015 units)
• Fill Rate - +25%
• Revenue - +20% (\$22,585,604)

\$400,000 per week can be spent to improve customer service levels in order to maintain a 33% return on investment

25%

Improve Forecasting Methods

75%

Increase Safety Stock Levels

CONCLUSION
• Missed Sales - \$47.7 Million
• Problems - Price & Order Cycle Variability
• Optimized Solution: 20% (+\$23M)
Appendix: Add’l costs for new safety stock levels
• Assume inventory carrying costs are 10% of price
• Found inventory carrying costs are 25% of costs (http://bstocksolutions.com/blog/carrying-cost-of-excess-inventory/)