Edwards Shoes, Inc.

Case
Ela Cleofe
Jd Dilidili
Joem Fulo
Angel Villanueva

Edwards Shoes, Inc.

a Shoe Producer
Company?
AWhats
shoe producer
holding Holding
company
founded by
- Edna
A holding
company
that Moore
owns shoe producers and
Smith
and Ward

ships shoes to strategically located warehouses. These

Owned 4
Shoeeach
Manufacturing
Concerns
warehouses
would
become distributing
centers
located
focused
onat:
presenting a complete line of shoes with a
Rockford,
Illinois
selection
of brand
names to retails customers
Boston, Massachusetts Owned 8 Warehouses located
Omaha, Nebraska at:
Atlanta, Georgia
Denver, Colorado
Morgan Hill, California
Raleigh, North Carolina
Trenton, New Jersey
Madison, Wisconsin
Houston, Texas
Manchester, New Hampshire

LEGEND:
Shoe Manufacturer
Warehouse

Edwards Shoes, Inc.

Year 1994 Sales by Operations: $ 240M
Year 1994 Net Profit: $ 25.9M

(10.8% of sales)

Table 23-1

Edwards Shoes, Inc.

Packing of shoes is done by
the 4 producers in sets of 12
pairs, 24 pairs, or 36 pairs per
carton
Transportation costs components:
Weight of packed shipping cartons
Distance the cartons are transported
No. of cartons shipped

Edwards Shoes, Inc.

An outside transportation company
ships the shoes to the 8 warehouses

Transportation charges of
the transportation company
are based on:
Distance (according to zone)
Weight

Edwards Shoes, Inc.

Table 23-2

Edwards Shoes, Inc.

Table 23-3

Edwards Shoes, Inc.

Table 23-4

Edwards Shoes, Inc.

Table 23-5

Edwards Shoes, Inc.

Table 23-6

Edwards Shoes, Inc.

Table 23-7

Case Questions:
1. Prepare a table showing the
number of cartons and the
appropriate cost per carton,
shipped by each of the four
producers to each of the eight
warehouses during 1994

Case Questions:
2a. Prepare a table based on
data from the table created for
Question 1, showing the total
actual cost incurred for each of
the four producers to ship
shoes to each of the eight
warehouses during 1994

Case Questions:
2b. Prepare a table based on
data from the table created for
Question 1, showing the total
actual cost incurred for each
warehouse to receive shoes
from each of the four producers

Case Questions:
3a. Prepare a table similar to
the
tables
created
for
Question 2, showing the
lowest possible costs for each
of the four producers to ship
shoes to each of the eight
warehouses during 1994

Case Questions:
3b. Prepare a table similar to
the tables created for Question
2, showing the lowest possible
costs for each warehouse to
receive shoes from each of the
four producers

Case Questions:
4. Prepare a comparative
analysis of the two tables from
Question 3, showing dollar and
percentage differences.

Case Questions:

5. Due to rising costs, competition, and

economic times, the holding companys
management has decided that one of the
four producers must be closed in a near
future year to save transportations costs
and that the shoes made in 1994 by the
soon-to-be-closed producer be allocated
proportionately to the three remaining
producers. Assume that the total number
of pairs of shoes shipped and the number
of shoes received by each of the
warehouses will decrease by 10% from the
figures for 1994. Which producer, if any, do

Case Questions:
6. Should the decision to close one
of the shoe producers be based
solely on saving transportation
costs? What other criteria, if any,
should also be considered?