Grandma Studor Case

Grandma Studor Case - Grandma Studors Bakery, Inc. Grandma...

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Grandma Studor’s Bakery, Inc. Grandma Studor’s Bakery, Inc. (GSB), is a major national supplier of bread, sweet rolls, cakes, and other bakery products. In addition to its bakery products, Grandma Studor’s makes and sells well-known brands of baking mixes, flour, prepared dough, and frozen pizza. GSB’s industrial foods division sells a wide range of biscuit, doughnut, and other dough mixes, several types of specialty flours to bread and cereal makers, and various commodities and feed ingredients. In 1996 GSB made after-tax profits of $92 million (all figures in U.S. dollars) on sales of about $1.5 billion. Materials Management The GSB materials management area purchased about $200 million of ingredients and commodities during 1996. One of GSB’s most important commodities and ingredients is flour. GSB treats flour as a commodity that is used as an important raw material but also sells flour to others and deals in flour and wheat futures to reduce risk related to price fluctuations. In 1996 one of the senior buyers, David Prince, managed about $90 million in transactions relating to flour and wheat. GSB uses many different kinds of flour in its various products. GSB manufactures flour as well as buying it on the open market, and since GSB produces several different kinds of flour, GSB must buy several different varieties of wheat. Prince attempts to minimize the final cost of a hundredweight of flour, which is a complicated task because there are so many variables involved, and they are changing all the time. The costs of flour, flour futures, milling flour, transporting flour, wheat, wheat futures, transporting wheat – all of these factors may affect the cost of a hundredweight of flour. The Flour Commodity Report System To manage the acquisition of the flour that GSB needs each year and to control the risk and minimize the cost of this important material, Prince needs a great deal of information in order to analyze alternatives. Since things are always changing, timing is very important when buying and selling flour, wheat, and futures contracts for both. For this information Prince depends upon the flour commodity report system that is operated by his assistant, Donna Hornibrook, on her PC. The flour commodity report system is an Lotus 1-2-3 application consisting of
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Grandma Studor Case - Grandma Studors Bakery, Inc. Grandma...

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