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Unformatted text preview: The tea company mixes a
variety of basic teas from different
vendors to make its own tea
blends. It customized its supply
chain software to analyze the
worldwide availability and cost of
the basic teas. Then the program
factors in Lipton’s current inventory of the teas and determines
the optimal blending option. In just
the first year of its use, supply
chain software saved Lipton $3
Sources: Brian Milligan, “Supply Chain Software Moves to the Web,” Purchasing
(April 6, 2000), downloaded from www.
findarticles.com; Alexei Oreskovic, “Never
Break the Chain,” The Industry Standard
(July 2, 2001), downloaded from www.
findarticles.com; and “Yahoo Market
Guide—Dell Computer Corporation,” Yahoo!
Finance, downloaded from biz.yahoo.
com/p/d/dell.html. sonal peaks occur. The conservative strategy avoids these risks through the
locked-in interest rate and long-term financing, but it is more costly because of the
negative spread between the earnings rate on surplus funds (5% in the example)
and the cost of the long-term funds that create the surplus (8% in the example).
Where the firm operates, between the extremes of the aggressive and conservative
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