Supply Chain-Johnson and Johnson

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Read the case carefully to understand the situation of making this important decision of granting customers higher or lower prices based on the supply chain costs specific customers make. The case includes situational information, as well as numerical data, which should be combined to perform the appropriate analysis and reach the correct decision.

An Excel template is provided for guidance on performing supply chain cost analysis, dissecting costs among customers, and assessing customer profitability. Through the case questions, you are walked step by step to reach your final decision.

For grading, you should submit your Excel workbook, along with a word document answering and explaining case questions in detail. The Word document should be 2 to 3 pages. A brief introduction and conclusion to wrap up your findings should also be given.

Case Questions
Johnson and Johnson
Use the information in case Exhibits 1 and 2 and other necessary data in the case on activities and costs to develop an Activity-Based Cost system for JBI, i.e., how much each activity is costing JBI for each customer. Excel templates are available (Sheets 1 and 2) to guide your work.
Use this ABC system to determine customer profitability for Saver Superstore, Oscar’s Oddlots, Midewellen Supermarket, and Downtown Retail (Sheet 2 of the provided template).
Use your results from Sheet 2 to compare customer costs and profits of the traditional costing system to the ABC system you have designed in (1). According to your ABC system, would you recommend entertaining a lower price to Saver SuperStore?

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