calculate cost for transportation and stock-keeping?

Bain case: Asian lubricants producer
New answer on Sep 24, 2021
2 Answers
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Janet asked on Sep 23, 2021

Hi everyone, 

I went through this case yesterday as an interviewer. I found confusing that “calculate costs for transportation and stock-keeping” is mentioned in the main conclusion about production. Does anyone know how to do this calculation because I don't seem to find the relevant numbers everywhere? Or did I miss some critical information? 

Thank you!

 

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Luca
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replied on Sep 23, 2021
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello Xiaoyun,

I agree with you on this.
You don't have quantitative data to support that suggestion even if it's reasonable to make the assumption that transportation and stock-keeping cost are extremely significant for this industry.

You can find an hint on stock-keeping cost influenced by production strategy on the previous section:

In this case, they can, on the other hand, only react very slowly to local fluctuations in demand in Turkey or they need to have large stocks.

 

Hope it helps,

Luca

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Janet on Sep 24, 2021

Thank you Luca for your comment! I think that is a good way to interpret this confusion. I took the word "calculate" too literally :)

Ian
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replied on Sep 24, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi Xiaoyun,

To be honest, I'm a bit confused myself (at least you have company!).

I *think* that you're not required to calculate these costs. Rather, the case is just saying “when we calculate costs in the future”.

That's because the transport/stock-keeping costs are only raised at the end of the case:

"III. Strategy

Here the interviewee should set up a possible strategy for the market in Turkey. The 5 classic dimensions of a how-to-win strategy should be addressed:"

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Janet on Sep 24, 2021

Thank you for sharing your insight! I agree with you that this would be a reasonable way to solve it :)

Luca gave the best answer

Luca

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