case 9-1 - Case 9-1 Penner Medical Products Situation 1 Penner was a medical supplies distributor and retailer supplying small and medium-sized medical

case 9-1 - Case 9-1 Penner Medical Products Situation 1...

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Case 9-1: Penner Medical Products Situation: 1. Penner was a medical supplies distributor and retailer, supplying small and medium-sized medical practices. --$30 million sales --120 employees--9 warehouse workers ($15 per hour) --5 retail locations and central warehouse -- Order from phone or website --30,000-square-foot warehouse 2. Stinson Distribution Company is Penner's only supplier of medical offices' equipments. 3. Missed delivery dates and incomplete orders from Stinson were resulting in customer complaints and lost sales. In this way, it increased transportation costs and inventory holding costs (15 percent). 4. Penner used truck to transports goods ($55 per hour), which increased fuel costs. --empty one-way trip to Detroit (9-10 hours) --fully loaded with goods ($15,000) back to Rockford 5. Penner shared the trips with other local businesses to cut down transportation costs, but it was no effectively. 6. Because of security, delays at the Detroit border crossing, and extending shipping times and costs for Penner (30-60 mins). 7. Incomplete paperwork resulted in 25 percent of goods delay. 8. Neil used UPS to handle rush orders from Stinson with premium costs, which solved paperwork problem and got products on time. But Penner needed to pay $1,000 per month to rent warehouse for shipments. Basic issues: 1. Specialized transportation service options 2. FOB terms and incoterms 3. “Best Value” delivery decisions 4. Key selection carrier criteria 5. Documentation in freight shipments
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