Le Club Français Du Vin

Le Club Francais du Vin Case Report

Group Members: Adrienne Durish-Christopher, Nichole Fortner, Matthew Moss, and Melissa

This case concerns Le Club Francais du Vin, The French Wine Club, which provides its members extremely good quality wines at a great value. Le Club Francais du Vin creates their wine catalog with a selection of wine from mid-size growers. Providing club members select wine from mid-size growers allows them to capitalize on a niche market as most wine consumers purchase their wine from local supermarkets. The issues in this case concern forecasting the wines according to historical demands. Ordering optimal quantities to meet customer demand is crucial to provide exceptional customer experience and to maximize profits while reducing unnecessary losses due to overages.

Stephane Zanella, Directeur General of Le Club Francais must analyze historical forecast and demand data to aid in the wine catalog orders for the upcoming season. This is not an easy task as many variables are involved in making this important decision. If he orders too much of a particular wine, then he will be faced with overage costs. If he orders too little of a particular wine, then he will be faced with underage costs and dissatisfied customers. Both of these scenarios incur negative consequences to the company and is the reason accurate, precise analysis is required when selecting order quantities for the next season.

The first issue for consideration is the underage cost for Le Club Francais du Vin of having one too few bottles of wine in their inventory. The calculation to determine the cost underage (Cu) is found by subtracting the cost from the retail price. For example, a bottle of wine with a retail price of 10 euro and cost of 5 euro has a cost underage (Cu) of 5 euro.

The second issue for consideration is the overage cost for Le Club Fracais du Vin of having one too many bottles of wine in their inventory. The formula to calculate the cost overage (Co) is...