Oc Model Case Study

722 Words3 Pages
Benefits (1) O/C model provides Coos’ the greatest cost savings while incurred smallest cost increases compared with the other four models. Its projected total cost savings are $11,750,000, and total costs increases are only $4,880,000. In other words, for every dollar saving, O/C model would cost $0.4153. For material resource planning model, every dollar saving would create $1.7403 cost increases. We can see that it is not an economic option to adopt this model. Linear model generates $0.8504 cost increases for every dollar saving, 2 times as much as that of O/C model. If Coors only implements configurator or optimizer, this number is also not as low as O/C model. In addition, among these five choices, only the NPV of O/C model is positive, reaching $493,458, which means that O/C model could generate the largest amount of cash inflow to Coors. Regarding the IRR, the IRR of O/C model is greater than WACC (10%) and it is also the highest among the three alternatives, which indicates the O/C model can recover its investment faster than the…show more content…
It saves cost and reduces cycle time of the supply value chain comparing with other alternatives. For instance, O/C model’s optimizer can make more efficient purchasing, fewer rush orders, more efficient production runs, less production line downtime, reduced raw material and in process inventories, reduction of raw material and process inventory spoilage, and more efficient packaging and bar coding. Using the configurator software for downstream processes would result in savings through more usage of railroad cars (which had in the past been approximately 60 percent cheaper than truck transportation), reduction of costly LTLs, decrease of finished goods inventories, reduction of finished goods spoilage, more efficient processing of product recalls, elimination of several public warehouse locations, and reduced accounts receivable with the CoorsLink EDI
Open Document