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Dream beauty company case study answers


Dream beauty is a company that deals with the manufacture and production of cosmetics and consumer beauty supplies. It has its capital in Nevada and provides its services to clients across the United States.

In a time when costs in the area of supply chain have been increasing, the company management became concerned. The company therefore heightened its attention to this area.

The management believes that the rising costs may be due to additional sales, but they suspected that other factors could be on play, as well. Currently, order processing, packaging, labeling and delivery are the components that make up the total supply chain-related cost.

Processing of orders accounts for $10 million, packaging $8 million, labeling $2 million, and delivery $30 million. This brings the company’s total cost to $50,000,000.

Labeling contributes the least cost in relation to the other components, but the company could further lower it by centralizing labeling, in order to take advantage of the economies of scale.

Dream Company channels its products to the market via direct retail stores, mass merchants, and convenient stores. These channels are independent each responsible for its income statement and balance sheet. Direct sales account for 50 percent of sales, hence, contributes the highest profit considering that the three channels are relatively profitable.

The company offers all its clients the same service level, that is, the three-day fulfillment cycle. Its model of Supply Chain boosts its profitability and leadership in supply chain management.


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