Clearfield Cheese Company
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What are three problems that Clearfield Cheese Company is facing? At least one problem should address transportation. (Hint: you can use any of your business studies to address the problems) If their inventory levels are high, it means the cost of holding inventory it’s going to go up. The reason the inventory levels are high could be that the transit time is too high and they have to retain more safety stock to not run out of stock. They have a problem with reliability which means that they don’t have a consistency in transit time, this is another reason to having too much safety stock, which results in higher inventory levels, therefor higher costs. Another problem they mention is the transportation costs. Maybe the type of mode they are using is not the most favorable for them. And because demand for transportation is sensitive to price changes we have to see further in to this problem. Canadians have a favorable advantage over the Clearfield Company because by being subsided by their government they could improve in a much rapid way and having a good exchange rate makes their costs to be less that the Clearfield Company. Because the cut in costs, the Canadian company has a much broader amount of choices of transportation to choose from because they have more money to spend in transportation, contrary to Clearfield that have more costs in the inventory and transportation costs.
This permits Canadians to choose a more efficient and effective mode, because they have more money to spend, therefore more options to choose from than Clearfield. List a solution for each problem and some explanation as to why your solution would work. For the first problem which is the high inventory levels, I think the problem is the provider of the transit service. We should consider changing the provider, because the capability of providing the service is not good. So, we should investigate which provider has a better reliability and capability for the company to have a lower transit time, therefore improve their inventory levels, and lowering the cost of holding too much inventory. For the second one, that is the transportation cost we should consider changing the mode of transportation. Maybe Clearfield uses the current mode of transportation because of the history behind the company, or maybe they feel more secure with that mode. Whichever is their reason, they should change it to the most convenient type.