Thursday, 10 March 2016

A company manufactures a product which involves two processes, namely pressing and polishing For the months of January the following information is available

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Cost and  Management Accounting



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  1. X is the manufacture of Mumbai purchased three chemicals A, B and C from U.P.The bill gave the following information:

Chemical A:                          6000 kgs @ Rs. 4.20 per kg                                   Rs        25,200
Chemical B:                          10000 kgs @ Rs. 3.80 per kg                                             38,000          
Chemical C:                          4000 kgs @ Rs. 4.75 per kg                                                19,000
VAT                                                                                                                              2,055
Railway Freight                                                                                                         1,000
Total Cost                                                                                                                  85,255

A shortage of 100 kgs in chemical A, of 140 Kgs in chemical B and Of 50 kgs in chemical C was noticed due to breakages. At Mumbai, the manufacture paid octroi duty @ 0.20 kg. He also paid hamali, Rs 20 for the chemical a, Rs 58.12 for chemical B and Rs 35.75 for chemical C. Calculate the stock rate that you would suggest for pricing issue of chemicals assuming a provision of 4 % towards further deterioration and also show the quantity (kgs) of chemicals available for issue.

  1. ABC Ltd has collected the following data for its two activities. It calculates activity cost rates based on cost driver capacity.                                                                                    

Activity                      Cost driver                            Capacity                     Cost
Power                         Kilowatt hours                                 50000 hrs                 Kilowatt Rs 200000

Quality Inspection   Numbers of inspection       10000 inspection                    Rs 300000

The Company makes three products, A, B and C.For the year ended March 31, 2004, the following consumption of cost drivers was reported:

Product                                              Kilowatt-hours                    Quality Inspection
A                                                         20000                                                7000              
B                                                         40000                                                5000
C                                                          30000                                                6000

Compute the costs allocated to each product from each activity
Calculate the cost of unused capacity for each activity.

  1. Reliable company wishes to discontinue the sale of one of the products in vew of unprofitable operations. Following details are available with regard to turnover, cost and activity for the current year ending 31st March.                                                       

Products
                                                P                                  Q                     R                     S
Sales Turnover                     Rs.600000                Rs.1000000  Rs.500000    Rs.900000
Cost of sales                               350000                        800000       370000          480000
Storage area (square meters)               40000                          60000         70000              30000  
Number of cartons sold          200000                      300000        150000          350000    
Number of bills raised                         100000                       120000           80000          100000

Overhead costs and basis of apportionatement are:

Fixed Expenses
                                                                                                            Basis of Apportionatement
Administration wages & salaries                          Rs.100000    Number of bill raised
Salesmen salaries a & expenses                                 120000     Sales turnover
Rent and insurance                                                        60000     Storage area
Depreciation                                                                    20000     Number of cartons

Unfixed Expenses

Commission                                                                                     3 % of sales
Packing material & wages                                                              Re 1 per carton
Stationery                                                                                         Re 0.50 per bill

You have to prepare
1. Staement showing summary of Selling & Distribution Costs to the products
2. Profit & Loss Statement showing contribution and profit or loss of each of the products to enable the Company take an appropriate decision on discontinuance of the sale of a product.

  1. The Tata Infrastructure Co. is involved in two contracts Contract 69 & Contract 96 during the current year. The following information relates to these contracts, which were started on January 1 and July 1, respectively.                                                                          

Contracts
                                                                                                A                                 B
Contract Price                                                                      Rs.300000                Rs.400000
Direct material issued                                                              55000                          40000
Material returned to store                                                        1500                            2500
Direct Labour                                                                             36000                         22000
Wages accrued on Dec 31                                               2000                           2500
Plant installed          (at cost)                                                   30000                         40000
Establishment Charges                                                20000                         15000
Direct Expenses                                                             20000                         30000
Direct expenses accrued, December 31                      2000                           3000
Work certified by architect                                                   320000                       120000
Cost not work not yet certified                                  10000                         30000
Material on site, 31 December                                   11000                            5500
Cash received from contractees                                 60000                       150000
Depreciation of plant p.a                                               12 %                              34%

Prepare Contract & Contractees Account for Contract 69 & Contract 96.

  1. A company manufactures a product which involves two processes, namely, pressing and polishing. For the months of January, the following information is available:            

Pressing                                 Polishing
Opening Stock                                                                     
Inputs of unit in process                                        1200                                       1000  
Units completed                                                      1000                                         750
Unit under process                                                    200                                         250
Material Cost                                                                        Rs.69000                               Rs.17500
Conversion Cost                                                      328500                                  82500

For incomplete unit in process, charge material costs at 100% and conversion costs at 60% in the pressing process and 50 % in the polishing process. Prepare a statement of cost and calculate the selling price per unit which will result in 25 % on the sale price.

  1. M/s Modern Company Ltd furnishes the following summary of Trading & Profit and Loss account for the current year ending March 31.

To Raw Material                                          140000          By sales (12000 units)                    510000
To direct wages                                              72000          By finished stock (200 units)           6000
To production overheads                             45000          By work in Process 
To selling & distribution overheads          43500                       Material         26800
To administration overheads                     41010                       Wages                        11786
To Preliminary Expenses w/off                    3250           Production overheads          8000              46586
To Goodwill w/off                               2541            By interest on securities (gross) 5000     
To dividend (net)                                 4000
To income-tax                                                  5870
To net profit                                                 210415
                                                                       
567586                                                         567586

The Company manufactures a standard unit. The scrutiny of cost records for the same period shows that-
  1. factory overheads have been allocated to production at 20 percent on prime cost
  2. Administration overheads have been charged at Rs.3 per cent on units produced
  3. Selling & distribution expenses have been charged at Rs.4 per unit on unit sold.

You are required to prepare a statement of cost, to work out profit as per cost accounts, and to reconcile the same with that shown in the financial accounts.


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A company is operating in two unrelated businesses. The first one is making common salt, which is sold in one-kilogram consumer packs


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CASE-1 (16 Marks)
Bloomsday Outfitters produces T-shirts for road races. They need to acquire some new stamping machines to produce 30,000 good T-shirts per month. Their plant operates 200 hours per month, but the new machines will be used for T-shirts only 60 percent of the time and the output usually includes 5 percent that are "seconds" and unusable. The stamping operation takes 1 minute per T-shirt, and the stamping machines are expected to have 90 percent efficiency considering adjustments, changeover of patterns, and unavoidable downtime. How many stamping machines are required?

CASE-2 (16 Marks)
In the table given below the Distribution Manager is expected to service these DCs as per the demands placed. If the actual sales after completing week one is as follows, what would be the quantities that would need amendment as far as Distribution Manager is concerned to service for week two and onwards?
After week one the actual sales to Forecasted sales for week one ratio is as under: Mumbai did 80 % of forecast , Lucknow did 75 % of forecast Kolkata did 60 % of week one forecast Chennai did 125 % of forecast and Delhi did 150 % of week one forecast

CASE-3 (16 Marks)
After working for 30 years, Ramjee Somjee Dutt opted for VRS and started a courier company and did very well in the first four years. He was now looking for expansion of his business and decided to venture into Road transportation business between Chennai and Mumbai and Mumbai and Delhi as he felt that he could do well on this line. However before taking a final decision he hires your Management Consultant firm formed by yourself. He has requested you to work out the Price to quote
his clients for these two routes considering the costs involved. He expects to earn a minimum profit of Rs 1000 per day per truck after meeting all expenses. Your analysis of market conditions tell you the following:
Vehicle cost Rs 7 lacs Depreciation 15 % Maintenance costs per day Rs 150 Drivers monthly Salary Rs 5000 : Attendants monthly salary Rs 3000 . Misc expenses Rs 200 per day. Driver allowance is Rs 125 per day and attendant gets Rs 75. Diesel cost per liter is Rs 25 and the vehicle gives an average mileage of 4 km to a liter. The Financial institutions offer loans at 10 % interest pa, which Ramjee has been negotiating. It has been observed that on an average the vehicle covers 400 km per day. The
distance between Mumbai to Delhi is 1500 km and Mumbai to Chennai is 1350 km. The driver gets rest day in Mumbai only for one day after they return from any trip.

CASE-4 (16 Marks)
A company is operating in two unrelated businesses. The first one is making common salt, which is sold in one-kilogram consumer packs. The second business is making readymade garments. The owner of the businesses has decided to implement Materials Requirement Planning (MRP) in one of the two businesses, which is likely to give him greater benefit. Assuming that the current turnover and profits of both the units are comparable, compare the relative benefits and limitations of Materials
Requirement Planning (MRP) for these two businesses.


CASE-5 (16 Marks)
A Manufacturer of motorcycles buys spark plugs at Rs.15 each. Now he wishes to manufacture the plugs in his own factory. The estimated cost for the manufacture of spark plugs is around Rs.50,000=00 and the variable cost comes to Rs.5 per spark plug. The Production Manager advises the Manufacturer that the factory should go for manufacturing instead of procuring them from the open market. List out reasons for the decision of the Production Manager backed up by the necessary data.

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A company invests Rs.10 lakhs and completes an energy efficiency project at the beginning of year 1 The firm is investing its own money and expects an internal rate of return IRR of at least 26%


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ENERGY MANAGEMENT


Q.1 : A plant consumes 4,500 tons of furnace oil per year (GCV =10,200 kCal/kg), as well as  43,000 MWh of electricity per year. Draw the pie-chart of percentage share of each type of  energy based on consumption in kCal (1 kWh = 860 kCal)
Q2) How much Stream is recuire in a heat exchange to heat 120 kg/ hour of a process fluid From 40o C to 90o C. The specific heat of process fluid is 0.24 kCal/kg oC and the latent heat  of steam is 540 kCal/ kg
Q.3
The following table shows the import bill of fossil fuels in million metric tonnes (MMT) and its cost in Crores Rupees over the last eight years.
(i)        calculate the average annual percentage increase of fossil fuel imports
(ii)       calculate the average annual percentage increase of the import bill
(iii)     calculate the average costs for the last eight years, in Rs. Per metric ton of imported fossil fuels.
Q.4
Fuel substitution from a high cost fuel to a low cost fuel in boilers is common to reduce energy bill.  For the following situations calculate:

(i)                annual reduction in energy costs in Crore Rs.
(ii)             annual change in energy consumption in %. (Calorific value of fuels not required for calculations)

Before substitution:

            Steam output                       =                                  6 tons/hour
            Fuel consumption   =                                  1 ton oil per 13 tons of steam.
            Operating hours      =                                  6400 / Year
            Fuel costs                  =                                  Rs.13,000 /ton of oil
            Boiler thermal efficiency (yearly average)=       82%
           
After Substitution:

            Steam output                       =          6 tons/hour
            Fuel consumption   =          3 tons of waste wood per 13 tons of steam
            Fuel costs                  =          Rs.2,000 / ton of waste wood
            Boiler thermal efficiency (yearly average)         = 74%
Q.5 A company invests Rs.10 lakhs and completes an energy efficiency project at the beginning of year 1. The firm is investing its own money and expects an internal rate of return, IRR, of at least 26% on constant positive annual net cash flow of Rs.2 lakhs, over a period of 10 years, starting with year 1.

(i)                Will the project meet the firm’s expectations?
(ii)             What is the IRR of this measure?
Q.1) A waste heat recovery system can be installed in a furnace, which will cost Rs. 7,00,000/- to  install. This system is expected to have a useful life of 6 years. The salvage value will be Rs.  2,00,000/-. The system will reduce the energy cost by Rs. 2,00,000/- per year, when it operates at full capacity. However the plant will be operating at partial capacity for the first 3 years and the annual energy savings will be at 70% of the energy cost savings at full capacity (Rs. 1,40,000/-). (20 Marks)
The new system will entail a maintenance cost of Rs. 10,000/- per year for the first 3 years and Rs.12,000 per year for the next 3 years. A major overhaul is required in the 3rd year, which  will cost Rs 1,00,000/-
a)     If discount rate is 10%, calculate the NPV and find out whether this energy conservation measure is profitable
b)     What is the profitability index for the project?
Q.2
An energy auditor undertakes the energy audit of a steam system. The operating  data is given as per the schematic diagram given below


Key data and assumptions are enunciated below:

a)                     Specific enthalpy of water at 10 kg/cm2 (g) pressure   :           186 kCal/kg
b)                    Specific enthalpy of evaporation/latent heat at 10 kg/cm2 (g) pressure      :           478 kCal/kg

c)                     Dryness fraction of steam generated       :           0.95
d)                    Coal consumption   :           840 kg/ hr
e)                     Net calorific value (NCV) of imported coal         :           6269 kCal/kg
f)                     Moisture in coal      :           3.5%
g)                     Hydrogen in coal     :           4%
            Other parameters as indicated in the above figure      :          

Based on preliminary data assessment as stated above, calculate the following:
                      
i.          Feed water temperature to boiler
ii.         Boiler efficiency by direct method on GCV basis
iii.       If the condensate return is enhanced to 6 TPH (steam generation of 7 TPH remaining same) what will be the reduction in coal consumption?



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A company has asked YOU to evaluate the firm’s productivity by comparing this years performance with last years


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OPERATION MANAGEMENT
Q1. Suzan has a part-time “cottage-industry” producing seasonal plywood yard ornaments for resale at local craft fairs and bazaars. She currently works a total of 4 hours per day to produce 10 ornaments. a. What is her productivity? b. She thinks that by redesigning the ornaments and switching from use of a wood glue to a hot-glue gun she can increase her production to 20 ornaments per day. What is her new productivity? c. What is her percentage increase (or decrease) in productivity?
Q2. Ahmet grows domatoes in his 100 by 100 meters garden. He then sells the crop at the local farmer’s market. Two summers ago, he was able to produce and sell 1200 kgs of tomatoes. Last summer, he tried a new fertilizer that promised a 20% increase in yield. He harvested 1350 kgs. Did the fertilizer live up to its promise?
Q3. A company has asked YOU to evaluate the firm’s productivity by comparing this year’s performance with last year’s. The following data are available:
______________Last Year This Year OUTPUT 10 500 units 12 100 units Labour Hours 12 000 13 200 Utilities 7 600 MU 8 250 MU Capital 83 000 MU 88 000 MU Has the company improved its PRODUCTIVITY during the past year?
Q4. A firm cleans chemical tank cars in the Bay Gazimagusa area. With standard equipment, the firm typically cleaned 60 chemical tank cars per month. They utilized 10 gallons of solvent, and two employees worked 20 days per month, 6 hours a day. The company decided to switch to a larger cleaning machine. Last February, they cleaned 60 tank cars in only 15 days. They utilized 12 gallons of solvent, and two employees worked 6 hours a day. a. What was their productivity with the standard equipment? b. What is their productivity with the larger machine? c. What is the change in productivity?
Q5. Serra’s Ceramics spent 3 000 MU on a new kiln last year, in the belief that it would cut energy usage 25 % over the old kiln. This kiln is an oven that turns “greenware” into finished pottery. Serra is concerned that the new kiln requires extra labour hours for its operation. Serra wants to check the energy saving of the new oven, and also to look over other measures of their productivity to see if the change really was beneficial. Serra has the following data to work with: Last Year This Year Production (finished units) 4000 4000 Greenware (pounds) 5000 5000 Labour (hrs) 350 375 Capital (MU) 15000 18000 Energy (kWh) 3000 2600 Were the modifications BENEFICIAL?
Q6. Ahmet Uslu makes wooden boxes in which to ship motorcycles. Ahmet and his three employees invest 40 hours per day making the 120 boxes. a. What is their productivity? b. Ahmet and his employees have discussed redesigning the process to improve efficiency. If they can increase the rate to 125 per day, what would be their new productivity? c. What would be their increase in productivity?
Q7. Magusa Metal Works produces cast bronze valves on an assembly line. On a recent day, 160 valves were produced during an 8-hour shift. Calculate the productivity of the line.
Q8. Kleen Karpet cleaned 65 rugs in April, consuming the following resources: Labour: 520 hours at 13 MU/hour Solvent: 110 litres at 5 MU/litre Machine Rental: 20 days at 50 MU/day a. What is the labour productivity? b. What is the multifactor productivity?
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3Mâ€TMs Scotch Brand TM Stretchable Tape (ST) is a 4 or 6 mil Linear Low


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PACKAGING MANAGEMENT

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Attempt any four cases
Case No 1 Stretchable Tape

3Mâ€TMs Scotch Brand TM Stretchable Tape (ST) is a 4 or 6 mil Linear Low
Density Polyethylene (LLDPE) backing with a solvent less adhesive. ST is a load
stabilization product which can provide reductions in raw materials and waste
disposal costs while maintaining a stable, breathable load. ST utilizes 3Mâ€TM5
patented Stretch Release adhesive technology which will not damage high intensity
graphic boxes.
3Mâ€TMs Scotch Brand TM Stretchable Tape was tested and proven to conform, by
an Independent Testing Facility, to ASTM D4 169–Standard Practice for Performance
Testing of Shipping Containers and Systems.

Background
A meat packing house was packing 48 to 50 lb. of hams into a 10” high box. These
boxes were interlock stacked 7 layers high on a 40” x 48” pallet. They were using
stretch film and corner boards to stabilize the load for transport to an off site blast
freezer. At the blast freezer the stretch film and corner boards were removed to
improve cold air flow to the hams and reduce freezing time. After the blast freezer,
the pallet was rewrapped with stretch film and corner boards and sent to distribution
warehousing.
The reason the meat packer is investigating ST is to reduce raw material cost,
application cost, and waste disposal cost.

Waste and Cost Savings
3M†TMs Stretchable Tape (ST), #8886, was used to stabilize the pallet loads of
hams after final packaging. Because ST allowed air flow through the pallet load, it
is not required to be removed during the blast freezer process. The average amount
of stretch film per pallet load was 15.7 oz. Because each pallet was wrapped twice,
the total amount of stretch film used was 31.4 oz. The same pallet configuration
needed only an average of 3.3 oz. of ST for the entire freezing and shipping process
This was a reduction of 28.1 oz. of LLDPE that requires disposal. In addition the
raw material cost savings for the customer was 42.5 percent per pallet load. By
using ST, additional savings in labor were realized by elimination of the second
application of stretch film.

Issues to be analyzed
1. Facts of the case.
2. Discuss how proper packaging leads to Waste cutting and Cost Saving.

Case No 2 Packaging Redesign
Background
Ciscoâ€TMs Small Office/Home Office (SOHO) products were traditionally shipped
in a corrugated container with a combination of Polyethylene and Polyurethane
foam cushioning. Not only was the pack composed of three different materials, it
was also difficult and time consuming to assemble.
In March of 1995 a new product was added to the SOHO line. The new product did
not fit into the existing package system. An opportunity arose to redesign the pack
based on the following criteria. A system called Korrvu packaging System was
formalized.
1. The new pack would have to accommodate all 4 products
2. The new pack would have to be easier to assemble
3. The new pack should be less expensive
4. The new pack should use less material
Solution
By implementing the Korrvu Packaging system on the SOHO product line, all four
criteria were met in the following manner:
The new pack would have to accommodate all 4 products.. The design of the
package allows all 4 products to fit into the same Korrvu insert. This also allows for
the same shipping carton and accessory kit carton to be used across products.
The new pack would have to be easier to assemble. The old pack required a RELF
mailer and corrugated accessory insert to be assembled. The accessories were
difficult to place in the insert and the mailer was time consuming to close and tape.
The foam inserts required removal of tear-outs to accommodate the various
products. Total pack out time was around 90 seconds.
The new package is considerably easier to assemble. The products are now shipped
in an RSC which is easier to assemble as compatible with automatic taping
equipment. The accessory was changed to a RETT mailer. The mailer comes into
Cisco pre-assembled and stuffed with the generic components of the accessory kits.
The Korrvu insert is easy to fold and place in the RSC. Total pack out time is now
35 seconds.
The new pack should be less expensive. The old package system cost $4.48 per
10,000. The new systems costs $2.20 per 10,000. Cisco typically ships between
20,000 and 30,000 SOHO units per month for a monthly average cost savings of
$57,000.
The new pack should use less material. The old pack was made up of two
corrugated components, one polyethylene component and one polyurethane
component.
The new pack is made up of three corrugated components. The Korrvu component
has polyurethane film adhere to corrugated but is still curb-side recyclable and is
RESY certified.

Both packs weigh about 1100 grams each, but the new pack contains no foam, takes
up less space volumetrically and is more easily recycled.
Conclusion
The successes achieved with the redesign of Ciscoâ€TMs SOHO product line
packaging show that companies can develop packaging systems that meet what
appear to be a diverse set of criteria. In this particular case, the main objectives
were to develop a single pack that could be used for a variety of products and
simply the pack out process. While pursuing these goals it became apparent that
substantial cost savings could be realized along with a reduction in the amount of
packaging materials used

Issues to be analyzed
1. Facts of the case.
2. Analyze how the new Packaging system was different from that of the old
system.

Case No 3 Reusable packagin2 for Videotapes

Through packaging innovation, 3Mâ€TMs Audio and Video Products Division has
created enormous industry interest in it†TMs new bulk videotape logistical shipping
container, the 3M Reusable Pak. This new container eliminates the cardboard,
plastic, and foam waste associated with other packaging methods. The 3M Reusable
Pak not only reduces waste and disposal fees, it has saved millions of dollars in
material costs and eliminated over 1.4 million cubic feet of waste from entering area
landfills and incinerators.
Background
As a leading producer of bulk videotape for the film duplication and packaging
industry, 3M was looking into videotape packaging when the Audio Video
Duplicator Association approached 3M and requested help in finding ways to
reduce packaging waste. Previous shipments of videotape in the “pancake” format
lead to the creation of 1 cubic foot of waste for every 8 pancakes shipped. The same
waste stream inflated custornerâ€TMs labor costs by increasing the handling expense
for both incoming shipments and waste disposal. In addition the previous packaging
involved 11 different components to create a standard package for the shipment of 8
pancakes. Because of the complexity of the packaging, 3M incurred increased
expense for both labor and material. As the need to redesign the packaging became
evident, a survey demonstrated that 3M customers rated recyclables, reusability,
environmental impacts and low cost equally when considering package design.
Creating a healthier environment and bottom line became the important fuel for the
challenge of a better package design.
Solution
3M created an innovative patented solution that eliminates all dunnage, reduces the
number of packaging components to 2, saves labor costs and eliminates any
material from entering the waste stream. In this case, the annual 1.4 million cubic
feet of waste is eliminated. The solution involves the use of two identical panels,
blow molded out of HDPE in an interdigitated format that allows for
interchangeability. Each panel collapses to create a stack ratio of 3 to 1 allowing for
the return shipment and reuse by 3M to be economically feasible. Through the
simplicity of the 2 piece design and use of non fiber material, customerâ€TMs
handling costs were also significantly reduced by making the containers safe for
transport directly into clean rooms. In some instances, all hand contact can be
eliminated for additional customer productivity enhancement. The success created
by the 3M Reusable Pak has created significant opportunities for a new system in
logistical packaging. These systems will incorporate design efforts that begin with
the customerá€TMs design process and eliminate dunnage, create better unitized
loads, add enhanced ergonomic designs and increase efficiency. All of which add
money to the bottom line.

Issues to be analysed
1. Facts of the case.
2. Analyze the solution innovated by 3M.
3. What would be your innovative input if given a chance?

Case No 4 Recycling of Steel Drum

In June 1991, Fred Honerkamp, Manger of Corporate Packaging for Dow Corning,
the worldâ€TMs largest manufacturer of silicone products, was asked by his
President to get the company out of steel drums within two years. After doing
substantial research, Mr. Honerkamp determined that a shift to other packaging
would be problematic and require significant up-front expense, about 95 percent of
fiber drums are disposed of in landfills and generally do not degrade, and plastic
drums occasionally have compatibility and reuse problems.
Mr. Honerkamp concluded that the apparent problem with steel drums was the lack
of a coherent, company-wide program to guarantee the collection, transport,
cleaning and reuse or recycling of the firmâ€TMs steel drums.
In January 1992, Dow Coming teamed up with a large manufacturer of steel drums,
Van Leer Containers, to establish the Dow Coming Steel Drum Recycling Program.
The program utilizes a network of about 15 reconditioning firms located throughout
the United States, all of which are audited annually by Van Leer or Dow Coming.
The tens of thousands of steel drums (all of which are 18 gauge, i.e., 1.2 mm, steel
throughout) shipped annually by the firm are collected by a participating
reconditioner. The drums, which must be RCRA-empty prior to collection (i.e.,
“drip dry), are then cleaned, refurbished as needed, painted, tested and reused.
Drums that are not capable of being reused are cleaned, crushed and recycled into
new steel products.
According to Mr. Honerkamp, the program has been extremely successful. It diverts
drums from landfills, thus avoiding solid waste problems; conserves substantial
amounts of energy and natural resources by using containers that are capable of
making multiple trips prior to recycling; reduces potential environmental liability
for the company by insuring that all of the firmâ€TMs silicon drums are handled by
reliable reconditioning companies; and, raises considerably customer satisfaction by
guaranteeing that emptied industrial containers are handled efficiently.
Most importantly, the program saves money for Dow Corning and its customers.
Firms can specify a single drum design type, new or reconditioned, which is
commonly available in the market. Handling and storage problems are, therefore,
greatly reduced. Customers share in the savings because they can be certain the
drums are collected at little or no cost, and handled in an environmentally sound
manner.

Issues to he analysed
1. Facts of the case.
2. Discuss how did Mr Fred Honerkamp dealt with the problem posed by the
president Dow Corning.
3. Describe the Dow Corning Steel Drum Recycling Program and its effectiveness.

Case No 5 Re cycling Pallets

Background
Since 1943, Dole Fresh Vegetables (DOLE) and its subsidiaries have been leaders
and innovators in agriculture, and are credited with developing many technological
advances in the industry. Dole markets more than 40 fresh vegetables, shipping
throughout North America and the world. A division of Dole Food Co., Inc. Dole
Fresh Vegetables has approximately 4,000 employees.
As a leader in the community, DOLE is very proud of its recycling
accomplishments, having won the WRAP Award four times, in 1993, 1994, 1996,
1997. In 1996 the company earned a special WRAP of the Year Award given for its
outstanding achievements in waste prevention, recycling, buying recycled products,
and promoting waste reduction awareness. In 1992 DOLE won the Salinas Business
Recycling Award commendation for waste reduction.
Success story
DOLE purchases over 1.2 million pallets per year (1,165,296) for use in shipping
various commodities. DOLE operates year round, shipping from the Salinas Valley
in the summer and from Yuma, Arizona in the winter. Over the last few years
DOLE has saved thousands of dollars by recycling pallets. In just the past 12
months DOLE has saved over $226,800 by recycling more than 100,000 pallets.
Dole and the Valley Pallet Company have developed an excellent working
relationship. Valley Pallet handles all of Doles’ pallet recycling, including standard
or odd-sized pallets, and even including the broken pieces of wood. This year
Valley Pallet is coming out with a new product made from some of these broken
pieces of wood. They chip the wood and are turning it into garden ground cover and
erosion protection. The finished product can be colored with an environmentally
friendly substance to resemble redwood bark. The larger size wood chips are burned
for electricity in the Mendoda area.
This is a great success story! But success stories don’t happen overnight.. They can
only happen with the persistent and creative efforts of a company as a whole, no
matter what size.

Issues to be analyzed
1. Describe the success story of DOLE in your own way.
2. What is the learning element according to you from the Story.

Need Answer Sheet of this Question paper, contact


www.mbacasestudyanswers.com

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