Case

Johnson's Dairy

Difficulty: Beginner

Type: Candidate-led

Topics:

Case prompt

Johnson’s Dairy is a small dairy firm, supplying milk and related products to the English town of West Borford.

The firm sells its milk, cheese and other products to retailers, but also operates a traditional “milkman” delivery service, delivering 5000 bottles of milk per day to domestic houses. Milk is delivered to doorsteps via “milk floats” – small, low-speed, trucks built especially for this purpose.

Up until now, Johnson’s has been using a fleet of diesel-fuelled milk floats, which they purchased in the 1990’s. However, new clean air legislation, combined with increasing reliability problems from their ageing fleet, has prompted Johnson’s to purchase a replacement fleet of electric milk floats.

Johnson’s has received quotes from the UK’s three major milk float manufacturers. Each have agreed on discounted prices based on Johnson’s sourcing the whole fleet from that supplier exclusively. Johnson’s also wish to maintain only one model of float to reduce maintenance costs and so they only have to operate one kind of charging station in their depot.

Each manufacturer sells a different configuration of milk float. We have been engaged in order to work out which supplier’s offer Johnson’s should accept.

Comments

First, the candidate will need to establish the minimum number of floats required to deliver Johnson's milk each day.

The candidate should then establish which manufacturer's floats should be purchased for the replacement fleet and how many.

Detailed solution

Paragraphs highlighted in orange indicate hints for you on how to guide the interviewee through the case.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

1. How many milk floats are needed?

The candidate should first clarify their understanding of the question and ask for the information required to support a structured approach.

The following information can be given to the candidate upon request:

Each milkman works a five hour daily shift each morning. On average, a milkman delivers one standard one-pint bottle of milk per minute over this five hour period

Number of bottles of milk delivered per milkman per shift = 60 per hour for 5 hours = 300 bottles

Daily total bottle to be delivered = 5000

5000/300 = 16.67

Therefore 17 milk floats are required to deliver all the milk within the five hour time window.

2. Which milk floats to buy?

The candidate should be shown EXHIBIT 1, showing the deals offered by the three milk float suppliers

The following information should be given to the candidate:

The three milk float manufacturers which have provided quotes to Johnson’s for a new fleet are FloatMaster, Dairy Solutions and Crate Hauler.

The different milk floats offered by these suppliers have different capacities, measured in crates.

A crate of milk contains 20 standard one pint bottles.

5000/20 = 250 crates per day

Floatmaster

250/8 = 31.25
Therefore, 32 floats are needed
Cost = 32 x 16 = £512k

Dairy Solutions

250/10 = 25 floats needed
Cost = 25 x 20 = £500k

Crate Hauler

250/15 = 12.5

However, each float can only deliver 300 bottles or 15 crates within the five hour time window
Therefore, we must still have a minimum of 17 floats.

Cost = 17 x 32 = £544k

Dairy Solutions is the lowest cost for a fleet to meet Johnson's requirements. Therefore, we should buy 25 milk floats from Dairy Solutions.

Exhibits

EXHIBIT 1

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