Case Teaching Package
A case teaching package is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.
Length
This case is
10 pages in length and its case teaching package is
22 pages.
Abstract
This case is set in a large feedlot ranch for beef cattle in Colorado in 1991. The ranch has made a profit in only five of the past ten years. The issue is cost analysis for profit improvement, using SCM themes.
This is a very rich case which takes students into an unusual industry—beef. The case is used in conjunction with a technical note on the beef industry written explicitly to supplement it. The case deals with industry value chain analysis, supply chain management, process analysis, and cost driver analysis (specifically, scale economies). For all these issues, there is information in the case and/or note to support substantial financial analysis.
In the end, the case demonstrates how an SCM perspective can provide insights for transforming a "low return" business into a "good return" business.
Linkages to Textbooks or Journal Articles/Fit Within a Course
I use this case near the end of the SCM elective course. Students find the case difficult and challenging, but also interesting and rewarding.
In class, I follow the steps in the following supplemental assignment memo, which I hand out to students before they begin preparations for the class.
Supplementary Assignment Note
You should read the "Note on the US Beef Industry" in conjunction with the case.
First, skim read both the case and note for general content and an overview of the problem.
Then use the financial exhibits to do your analysis for question 1 to get a better perspective on the position of the feedlot ranch in the value chain.
Next, try question 4 about "intensive feeding."
Next, try question 3 about "Superpens" for the finish-ration (high ration) cattle. Obviously there are interaction issues between Superpens and intensive feeding.
Next, try question 2 about "big" trucks based on your recommendations regarding Superpens and intensive feeding. Consider trucking cost (and feed mill operation) for three scenarios:
Current operations
Superpens and intensive feeding
Change scenario B for "big" trucks. Assume the big truck would need 35 minutes per round trip, with Superpens and intensive feeding.
Then try question 6 if you are still "hanging in." Remember that total ration cost per head does not change. The question says 4600#, but this is a typo error. It should say 5060#.
Don't worry about question 5 unless something occurs to you while you are working on the other questions.
The case is an excellent example of the analytic power of value chain analysis coupled with competitive analysis at key steps in the value chain coupled with process analysis and cost driver analysis of the competitive breakthroughs.
Study Questions
Using the information in the accompanying industry note and in the case, lay out the economics of the beef value chain from the cow/calf ranch to the supermarket. From this value chain perspective, evaluate the advantages and disadvantages of the Wells-Monfort linkage.
Does a larger truck make sense for Wells given his new, enlightened view on management? Is one "Big" truck sufficient to meet the needs of the Chaparral ranch?
If you were Junior Wells and you started your analysis of "Superpens" by just analyzing Chaparral's finish-ration cattle, how would you approach the analysis? Would this innovation make sense if the pens cost $10,000 each to upgrade?
If Wells decides to implement intensive feeding, how much will his costs increase if he feeds his animals with the same frequency as the Researcher? Coupled with a 4% improvement in conversion, what is the net impact on Well's bottom line? Does it make more sense for Wells to use 4% improvement in conversion to reduce the holding period per cow by 4% or to increase the selling weight by 4%?
Where would you focus you future management efforts if you were Fred Wells?
Assuming that the conversion rates do not change (pounds of feed per pound of weight gain), does it make more sense for Wells to purchase 500 pound animals directly from Cow/Calf operators, or 750 pound animals from Stocker operators? The 500 pound animals will finish at 1050. Assume that both calves will gain weight at the same rate per day and the total ration cost won't change (9.2 ration pounds per pound of weight gain x 500 pounds gained = 4,600 pounds of ration per calf). Assume that a 500 pound animal costs the feedlot $5.00/cwt. more than a 750 pound animal because the extra 250 pounds is not viewed as equally high quality meat.
The downloadable file for this case is in Microsoft® Word 7.0 for Windows®.
If you do not have Microsoft Word, you can download the free Microsoft® Word Viewer 97 right here: For Windows 3.xFor Windows 95
