calculate cost for transportation and stock-keeping?

Question

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!

Answer 1

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

Answer 2

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:"