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Chard Appliances

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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Chard Appliances

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  1. Chard Appliances Becca Carlson Bethany Haefner Jack Lim Liang Wen

  2. Opportunity to increase annual revenue by 20% to $137M Chard’s Annual Revenue $137M Opportunity +$23M $114M

  3. Agenda • The Problem • The Root Cause • The Solution • Conclusion

  4. 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

  5. Chard’s identified potential reasons why have sales not increased

  6. Why does it matter?

  7. $47.7M sales opportunity was lost Appliance Units Demanded vs. Sold Units Demanded 256,821 181,173 Sold $47.7M Missed sales Week

  8. What affects how much we sell? Dependent Variable Independent Variables

  9. Price and Order Cycle Variability significantly impact the number of units sold

  10. SOLUTION: Integrate and strengthen business process management

  11. Ideally, eliminating variability would increase revenue 37%... “Perfect World” Solution • Decreased OCV by 100%, • Unit Sold: +37%; +67,173 units • Fill Rate: +26% • Revenue : +37%; +$42,298,829

  12. …Realistically, optimizing variability increases revenue 20% Optimized Solution • Minimum OCV – 2.82 (25%) and $560 (-11%) • Unit Sold - +35% (63,015 units) • Fill Rate - +25% • Revenue - +20% ($22,585,604)

  13. Recommendation: Invest money in increasing customer service levels $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

  14. CONCLUSION • Missed Sales - $47.7 Million • Problems - Price & Order Cycle Variability • Optimized Solution: 20% (+$23M)

  15. Back Slide

  16. Back Slide – OCV -100%

  17. Back Slide –Optimum

  18. 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/)

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