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Cost of transport quantitative analysis

Hi, when the cost of transport is calculated for the upcoming year, it states the number 20M, but we have decided previously to cut the <5€ product, so the transport cost should be now 15% lower as we would be transporting 15% less. Therefore, if we assume that the 20% could be saved from consolidating suppliers, we should take, before or after, the 15% of the product. I don't know if I am missing something, but what I have is:

 

Last year transport cost: 20M → New year transport cost (with old strategy for importing): 17M (85%volume*20M) → New year transport cost (with consolidated suppliers): 13.6M(17M-20%of17M reduction by consolidating) 

This gives the profit for the new year as:

141.6M + 3M + 3.4M = 148M

I might be missing something, so let me know if it should be done the other way!

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Top answer
Ian
Coach
on May 26, 2023
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi Jaime,

I *think* you're right. I didn't write the case so am not 100% sure. But having a quick look I agree with you

on May 25, 2023

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Pedro
Coach
on May 29, 2023
Bain | EY-Parthenon | Former Principal | 1.5h session | 30% discount 1st session

Yes, that seems to be right.

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