After reviewing the materials relating to the Walmart China case study, please address the questions in the order in which they appear. No more than 8-10 PowerPoint slides, the first of which should be a cover slide. These 8-10 slides should include any information in the form of charts, tables, graphs, maps, etc., that you feel may be relevant to include and that may help to strengthen your position.
Assignment Questions
- Evaluate the costs of the cross-dock and staple stock distribution center models. The information provided in the case should be sufficient to identify the types of relevant costs to be considered and develop numerical estimates for each as they relate to the cross-dock and staple stock distribution center models. What conclusions would you draw from your evaluation of the financial aspects of your analysis?
- Aside from the financial analysis included in Question 1, what do you consider to be the advantages and disadvantages of each of these approaches?
- If you were Lesley Smith, what would you recommend at the upcoming meeting in Bentonville, Arkansas? How might your recommendations be similar to or different from Walmart’s strategies in other major global geographies?
Further information, please read carefully
Q1 asks that you develop cost projections for both cross-dock and staple stock options for 2018 and 2025. Info on page 5 of the case write-up indicates that “Walmart would commit to a 20-year lease for $10.80 per square metre per month (applies to either option), with an annual price escalation equivalent to the rate of inflation.” In the interest of consistency, you should assume that this $10.80 figure starts in year 2018 (projected to be opening year for Dongguan DC), and that the lease fee will increase each year by 4% over the fee from the previous year.Also as pertains to Q1, you should find it useful to create a relatively simple spreadsheet to develop the cost projections. The results should be included in the PPT deck that is required for the assignment, but I also would like you to send an Excel file that includes the spreadsheet. This will be of significant help to the process as I will be able to look at the spreadsheet to see how your calculations were performed.The bottom of page 4 where it is stated that the average value for a case of product is $24.50. Also, looking at the third line of Exhibit 1 on page 7, the gross profit margin for Walmart for years 2011-2015 is approximately 25% (rounded). Doing the math, this means that the gross profit per case would be $8.15 as indicated below. This is important because it reflects the loss of profit when Walmart is unable to fill a request for replenishment of product from one of its stores.Revenue per case $ 32.65 (100%)Cost per case 24.50 (75%)Gross profit per case $ 8.15 (25%)
