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Agro

In: Business and Management

Submitted By zemariam76
Words 2863
Pages 12
March 18, 2004

Mr. Mark Agro
Agro Storage
Toronto, ON
M3P 23R

Dear Mark,

As you requested I’ve prepared the following report to address some concerns about your new warehouse. This report contains a full analysis of the situation, as well as a solid recommendation on how you should proceed.

I’ll be in contact with you next week to discuss this report, but should you have any questions for me before that time please feel free to contact me.

Sincerely,

Sample Student

Executive Summary

Agro Storage has recently purchased a cold-storage warehouse that stores packages for three customers. Although the warehouse runs at 85% capacity, the previous owner was unsatisfied with profitability. Pressure on prices downward and the non-homogeneity of customer packages complicates matters.

I have developed three criteria for choosing a solution – profitability, risk and perceived image our customers. Of all these, I’ve determined profitability to be the most important criteria upon which to base a recommendation.

In order to begin my analysis, I determined what an average package would look like for each customer. I then calculated the costs associated with each characteristic of a package, including weight, volume and area.

In order to make a recommendation, I focused on four main alternatives:

• Maintaining Status Quo • Contracting the whole warehouse to one customer • Maintaining all three customers, but renting additional space to the most profitable customer • Renting the entire warehouse equally to the two most profitable customers

I recommend contracting the whole warehouse to Hansen. This is the most profitable of the customers, based on the total amount of packages they can fit in the warehouse and the revenue and cost analysis. Even with a conservative price of $0.035 per pound, Hansen is still much superior an…...

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