Western Pharmaceuticals a&B Essay

1073 Words Apr 24th, 2015 5 Pages
Western Pharmaceuticals (A&B) 1

MGT 309 - Western Pharmaceuticals (A&B) Case Analysis 4
February 1, 2015
Latrina L. Black
Professor James Maddox

Western Pharmaceuticals (A&B) 2
Background
Western Pharmaceutical (A) was founded by George’s grandfather in Los Angeles. George, who is the CEO of the newly formed United Pharmaceuticals, decided to have Western Pharmaceuticals (A) merge with one of the largest over-the-counter cold remedy companies, Atlantic Medical. This merger was to help guarantee coast-to-coast market penetration for both Western’s upset stomach products and Atlantic’s cough syrups (Bowersox, Closs, Cooper, Bowersox, pg. 453). Western Pharmaceutical (B) is an extension of Western Pharmaceutical
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The required safety stock levels can be found in columns BD, BE, and BF. BH, BI, and BJ columns provide the DC product inventory averages necessary to have a 95 percent service level. Based on the standard cost, column BK converts the average inventory units into average dollars. As you can see, it will require the company to have $7.5M to achieve a 95 percent fill rate while the current situation has a 96+ percent service with double the inventory. 3. Looking at the charts, there are currently eight distribution centers. If you combine the Atlanta distribution center with another, it would leave us with seven centers from an inventory perspective. Columns BM – BX goes through the same process as in question #2, but at a 99 percent fill rate level. If you looking at columns BK and BX, the show how much additional inventory is needed to provide the increase in service. Columns BZ – CD completes the contribution analysis margin. It compares the marginal contribution of additional sales with the cost of more inventory. Column BZ shows a 95 percent service level with no backorders in the system. The CA column is considered the comparable sales service level at 99 percent, and column CB is the incremental margin between BZ and CA service levels. In order to increase
Western Pharmaceuticals (A&B) 4 the service level…