Case Study: Sahara Company

Case Study: Sahara Company

Sahara has just partnered with a hat company selling products on Amazon UK. You are managing the account on behalf of Eventuring and will be working closely alongside the founder. You want to assess their inventory situation in its current state and relay the information to the founder to make recommendations on what to reorder from his manufacturers and when to do so. The founder gives you the following information.

Information Given

The company is selling the following 5 products on Amazon UK.

Top Hat

Baseball Cap

Flat Cap

Sombrero

Beret

The Top Hat and Baseball Cap are manufactured in China. It takes 35 days for them to be manufactured and 40 days to be shipped to the Amazon fulfillment center in the UK where they will be ready for sale.

The Flat Cap, Sombrero and Beret are manufactured in the Netherlands. It takes 45 days to manufacture them there and 15 days to ship them to the Amazon fulfillment center in the UK where they will be ready for sale.

The hat company already has some stock in Amazon for each of the products:

  • Top Hat
    • 613 units
  • Baseball Cap
    • 225 units
  • Flat Cap
    • 297 units
  • Sombrero
    • 89 units
  • Beret
    • 822 units

Each hat sells through at a different rate on Amazon. The following figures are the number of units they sell in an average 30 day period.

  • Top Hat
    • 220 units
  • Baseball Cap
    • 40 units
  • Flat Cap
    • 102 units
  • Sombrero
    • 60 units
  • Beret
    • 400 units

The Manufacturers also have a minimum order quantity (MOQ) for each of the product lines:

  • Top Hat
    • 400 units
  • Baseball Cap
    • 100 units
  • Flat Cap
    • 400 units
  • Sombrero
    • 200 units
  • Beret
    • 900 units

The Cost of Goods (COGS) for each of the products is as follows.

  • Top Hat
    • £2.70
  • Baseball Cap
    • £2.40
  • Flat Cap
    • £2.80
  • Sombrero
    • £1.20
  • Beret
    • £3.00

Each Product sells for £12 and their net profit margins are as follows (there are other variables incorporated into each products PnL that are not visible):

  • Top Hat
    • 17.00%
  • Baseball Cap
    • 22.00%
  • Flat Cap
    • 15.00%
  • Sombrero
    • 40.00%
  • Beret
    • 14.00%

The company currently has £5,100 in the bank account, with a further £2,600 of income coming in each month.

Your main objectives are to minimise risk of running out of stock on products,  and maximising profit for the company. With those rules in mind, you set yourself two rules to try and abide by if at all possible.

  1. The Stock in Amazon should never fall below 30 days remaining.
  1. To ensure that when a new batch of stock arrives at amazon that there is at least 80 days worth of stock there.

Q1

Using these rules, and all the information above, create a model on google sheets or excel, which outlines how much stock the hat company will have to reorder for each product and when. You may have to make some difficult decisions. Try to make calculated decisions that are in the best interest of the company.

Case Study: Sahara Company

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