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Dop Case

In: Business and Management

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bDakota Office Products
Company Background
Dakota Office Products (DOP) was a regional distributor for office supplies to institution and commercial business, their product are pens, pencils, markers, and paper for copier and printers. At the end of year 2000 they suffer Net Loss amounted to USD 470,000 and this is the first time of their history DOP suffer Loss. DOP operated several distribution centers. They bought the supplies from many different manufacturers and keep their inventory at the storage. When the customer order comes, they ship the order to the customer by using 2 ways:
1. Shipment using commercial truck
2. Desktop delivery to individual customer with delivery truck driven by warehouse personnel to deliver with additional 2% markup
Pricing calculation on DOP:
1. Mark up 15% from product cost (to cover Warehouse Expense)
2. Another markup which determined based on actual expenses in prior years and general industry & competitive trends (to cover General and Selling Expense and allowance for Profit)
3. Price adjustment based on long-term relationship and competitive situation
Dakota had introduced Electronic Data Interchange and corporate website which allow the customer to place order.
The people on the distribution center can be divided into 2 teams, which is distribution center team and data entry team

The Problem Is
Although the company had introduced innovation in desktop delivery and electronic order entry, they couldn’t earn profit, what action should be taken to regain profitability?

Activity Analysis – Distribution Center
The activity on the Distribution Center summarized as follow:
Activity Activity Cost Pool Cost Driver Cost Driver Quantity Activity Percentage Distribution Center Team Data Entry Team
Processing inflow and outflow of inventory USD 2,000,000 Number of Carton Processed 80,000 cartons 90%
Shipment via...

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