Hw due on friday november 1st at 8 PM

Hint

Case #35: Each solution should be one of the vendor choices, and weigh the pros and cons of each. 

Case 35 TREADWELL'S: THE BUYER'S DECISION

Judith Everett, Northern Arizona University

Treadwell's Department Store is a traditional department store that was founded in 1898 by Oliver Treadwell in the American Southwest. Treadwell's has symbolized the spirit of the Southwest for nearly a century, maintaining exclusive merchandise related to the region as well as providing moderate to better apparel, accessories, and home furnishings for the entire family. The regional department store retailer has 18 branch stores located at the major cities in Colorado, New Mexico, Utah, and Arizona. Treadwell's has its buying offices and distribution center in Phoenix, Arizona, and sends merchandise to all of its branches from the central distribution center. James Treadwell Stephenson, the great-grandson of the founder, is the current chief executive officer. He is very concerned about maintaining the image of the company as well as the profitability of the firm.

Recently, Tiffany Brentwood has been promoted to the position of buyer of women's sleepwear and loungewear after successfully managing the intimate apparel and children's departments at the Santa Fe branch for four years. She also had held the position of assistant buyer for children's sleepwear and accessories for almost one year. Her long-term professional goals include becoming a divisional merchandise manager and store manager.

After her interview with CEO Stephenson, Tiffany realized the importance of the company philosophy to enhance images of the Southwest yet maintain profitability. She has sought unique merchandise that will reinforce the Southwestern image for Treadwell's. She found a resource for a group of pajamas, nightshirts, and tunics with matching leggings. This merchandise features Southwestern motifs and would fit perfectly with the goals of the firm to offer such merchandise. She believes that this style is not a passing fad in this part of the country and it should be a staple item in her department.

The merchandise featured tasteful interpretations of traditional Native American blanket designs. The garments were made from 100 percent cotton knit and produced in fashionable colors. Tiffany was confident that this merchandise would be popular with Treadwell's target customer.

Upon further investigation, Tiffany discovered that similar styles and colors of merchandise were available from two different resources: Southwest Specialties, a vendor in Los Angeles, and JC Enterprises, a local Phoenix vendor.

Southwest Specialties requires a minimum order of $5,000 at cost, offers terms of 3/10, net 30, and does not provide transportation costs. Transportation costs may be estimated at approximately $4.50 per dozen garments. There is a rumor, however, that there may be a trucking strike and Southwest transports by independent truck lines. Southwest Specialties is willing to participate in a cooperative advertising program. This Los Angeles firm assures Tiffany that merchandise will be in stock and available for reorder.

Table 6.3 Tiffany's Initial Order

The local vendor does not have a minimum purchase and will deliver the merchandise for free. JC Enterprises also offers terms of 3/10, net 30. (Refer to Chapter 7 for terms of sale.) This firm is not willing to share in the costs of a cooperative advertisement, since it is a small company. JC Enterprises cannot guarantee immediate delivery. This firm needs a 48-hour delivery notice.

Tiffany decides to bring the merchandise into the stores. She calculates her initial order, which is shown in Table 6.3 . Tiffany prepares a financial analysis of the purchase, also taking into consideration the discounts and shipping costs that would be applied to her orders to determine which vendor might be the best to purchase from. She studies her analysis, and then she takes it, along with the pros and cons about each vendor, to her divisional merchandise manager. Because Tiffany is new as a buyer, she does not feel confident about making the decision on her own and wants some feedback from her divisional manager.