Solution to Allied Office Product

1889 Words Sep 12th, 2013 8 Pages
Decision at Applied Office Product
Company's Background
In 1992, Allied Office Products was a corporation with annual sales of $900 million. It deals with manufacturing of following forms : * Business Forms * Specialty paper product such as writing paper, envelopes, note cards, and greeting cards
In 1988, as form manufacturing business matures, Allied Office Product had expanded into business form inventory management system and put a step ahead to attain a competitive advantage by embarking on a campaign that enrolled its corporate clients in program called "Total forms Control".
Starting with the mission of - "We know what you need…the right product at the right place at the right time”, Allied emphasis on the importance of a well
…show more content…
The cost driver will be Number of Requisition Lines according to Rick Fosmire.
Basic Warehouse Stock Delivery charge= Current Cost/Number of Requisitions Lines= 761,000/775,000 = $0.98/requisition line. * Pick Pack: Process of selecting cartons and partial cartons to meet customer is done by manual picking and packing. Currently 90% of all orders are pick pack. So the number of number of requisition lines that are pick packed is 775,000*90%=697,500. The Current cost is $734,000. The cost driver will be Number of Requisition Lines that are pick packed (i.e. 90%) according to Rick Fosmire.
Pick Pack charges = Current Cost/ Number of Requisition Lines that are pick packed = 734,000/697,500 = $1.05/requisition line. * Data Entry: Entry of customer order information into computer system. Current cost is $612,000. It is a labor intensive with all manual entry in the computer system. The cost driver will be Number of Requisition Lines (i.e. 310,000*2.5 = 775,000) because, according to Hazel Nutley, the only thing which matter is how many lines she has to enter and requisitions are submitted line by line.
Data Entry Charges = Current Cost/ Number of Requisition = 612,000/775,000= $0.79/requisition line. * Desktop Delivery: Specialized delivery of orders to specific areas of customer’s location. Current cost is $250,000. It is a premium service with no additional fees. Average time to complete the activity is from 1.5 to 2 hours. There are around 8500 requests

More about Solution to Allied Office Product