Ralston Cereal Decision-Making Model
Ralston CerealÆs third largest customer is Publix, which will not accept any cases of cereal with dents or damages on them. Ralston ships Publix approximately three truckloads of the cereal per week, comprising 52 units, which amounts to 1,400 cases, in which each box costs Ralston .009 cents. Ralston needs to develop a solution to please their customer, Publix, improve their service, and decrease the amount of their damaged product.
RalstonÆs first decision is how to ship their cereal to Publix without incurring any shipping damage on the cereal boxes. Since they are currently shipping the cereal the standard way, with the cereal boxes in cases, they need to develop a solution that is over and above the norm.
There are three possible avenues that Ralston could use to prevent shipping damage: improved cereal box manufacture, improved packing, and improved handling. Improved cereal box manufacture would mean manufacturing cereal boxes that are resistant or impervious to the usual damage, such as dents, tears, and box separations. Ralston could reinforce the cardboard, making it heavier and denser. This would make the boxes harder to damage but would also make the shipment heavier and more expensive to ship. Since the cereal costs under 1 cent to make, the heavier boxes could double the cost of a box of cereal to Ralston. They could switch from packaging their cereal in boxes to packaging it in clear plastic bags. This would lower the cost of packaging the product, but it would also hamper RalstonÆs marketing, since many people read cereal boxes but few read plastic sleeves. It would also give Ralston a less desirable image, because many cost-cutter cereal brands package their cereals in bags instead of boxes to save money. Ralston could use an innovative new material for their boxes, such as a lightweight flexible polypropylene, but this is likely to boost the cost of the packa...