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1. Explain the key benefit of the revised approach, and the reason for the benefit. 2. MasterTag has not yet decided to implement this plan. List the pros and cons you think should be considered.

1. Explain the key benefit of the revised approach, and the reason for the benefit. 2. MasterTag has not yet decided to implement this plan. List the pros and cons you think should be considered.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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CASE MASTERTAG BY NICOLE FOSTER, GRAND VALLEY STATE UNIVERSITY When MasterTag was founded in 1949, its founder, Ludwig Schmidt, set out to be a manufacturer of plastic fishing bobbers. Then, in 1950, Mr. Schmidt was approached by a local greenhouse owner and was asked if he could produce a line of horticultural labels for plants. At the time, these labels were made of wood. Mr. Schmidt adapted his machines to produce these labels and has been manufacturing the plastic "tags" for plants ever since. Over the years, the labels have increased in quality and now feature full-color pictures of the plants, along with their name and planting and care instructions. Many of Master Tag's largest customers are seed companies that sell the seeds to commercial growers. The large seed companies typically place one or two large orders with Master Tag at the beginning of the growing season. The seed companies then sell their seeds and the labels to their customers who grow the plants and sell them to the end consumer. For various reasons, the seed companies do not like ordering tags, but do so because their customers demand labels with their seeds. However, there are several problems with this ordering process. The main issue stems from the fact that the exact quantities of tags that will be needed is difficult to predict due to possible crop failures and the introduction of new items. To avoid a shortage of tags, seed companies order and ship a large quantity of tags to their customers. Tags are ordered early to allow for the time needed to incorporate the tags with the seeds. Seed companies usually end up each year with huge numbers of leftover tags. In fact, MasterTag's largest customers often end up with millions of leftover tags. When MasterTag's management became aware of all the unused labels and unhappy customers, they decided they must come up with a better solution for achieving a match between supply and demand of the tags. One possible solution would be to make an initial, fairly large batch, which would be produced and shipped directly to the growers instead of the seed companies, as is now being done. Later, when the grower results became available, a second batch would be produced using information from growers on how many additional tags are needed. The second batch would then be made and shipped to the growers. (See figure for Before and After.) Before After MasterTag sends tags to seed companies. Seed companies send plants and tags to growers. Growers receive plants and tags from seed companies. Plants with tags are shipped to retailers. End customers buy plants with tags. MasterTag sends a large batch of tags to growers. Master Tag sends additional tags to growers as needed. Questions 1. Explain the key benefit of the revised approach, and the reason for the benefit. 2. MasterTag has not yet decided to implement this plan. List the pros and cons you think should be considered. Seed companies send plants without tags to growers. Growers receive plants from seed companies and tags from Master Tag. Growers receive additional tags from MasterTag. Plants with tags are shipped to retailers. End customers buy plants with tags.
Transcribed Image Text:CASE MASTERTAG BY NICOLE FOSTER, GRAND VALLEY STATE UNIVERSITY When MasterTag was founded in 1949, its founder, Ludwig Schmidt, set out to be a manufacturer of plastic fishing bobbers. Then, in 1950, Mr. Schmidt was approached by a local greenhouse owner and was asked if he could produce a line of horticultural labels for plants. At the time, these labels were made of wood. Mr. Schmidt adapted his machines to produce these labels and has been manufacturing the plastic "tags" for plants ever since. Over the years, the labels have increased in quality and now feature full-color pictures of the plants, along with their name and planting and care instructions. Many of Master Tag's largest customers are seed companies that sell the seeds to commercial growers. The large seed companies typically place one or two large orders with Master Tag at the beginning of the growing season. The seed companies then sell their seeds and the labels to their customers who grow the plants and sell them to the end consumer. For various reasons, the seed companies do not like ordering tags, but do so because their customers demand labels with their seeds. However, there are several problems with this ordering process. The main issue stems from the fact that the exact quantities of tags that will be needed is difficult to predict due to possible crop failures and the introduction of new items. To avoid a shortage of tags, seed companies order and ship a large quantity of tags to their customers. Tags are ordered early to allow for the time needed to incorporate the tags with the seeds. Seed companies usually end up each year with huge numbers of leftover tags. In fact, MasterTag's largest customers often end up with millions of leftover tags. When MasterTag's management became aware of all the unused labels and unhappy customers, they decided they must come up with a better solution for achieving a match between supply and demand of the tags. One possible solution would be to make an initial, fairly large batch, which would be produced and shipped directly to the growers instead of the seed companies, as is now being done. Later, when the grower results became available, a second batch would be produced using information from growers on how many additional tags are needed. The second batch would then be made and shipped to the growers. (See figure for Before and After.) Before After MasterTag sends tags to seed companies. Seed companies send plants and tags to growers. Growers receive plants and tags from seed companies. Plants with tags are shipped to retailers. End customers buy plants with tags. MasterTag sends a large batch of tags to growers. Master Tag sends additional tags to growers as needed. Questions 1. Explain the key benefit of the revised approach, and the reason for the benefit. 2. MasterTag has not yet decided to implement this plan. List the pros and cons you think should be considered. Seed companies send plants without tags to growers. Growers receive plants from seed companies and tags from Master Tag. Growers receive additional tags from MasterTag. Plants with tags are shipped to retailers. End customers buy plants with tags.
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