Chapter 1' case study

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Chapter 1. case study

• 200224007 ???
• 200224010 ???
• 200224015 ???

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1. Evaluate the role of information systems in
the way ShopKo and Pamida run their business. How
important are they?(1)

• ShopKo implemented Markdown Optimizer from
  Spotlight Solutions in Mason, Ohio, which helps
  companies price leftovers so that the products
  will sell faster and with a better profit at each
  store. The software enables companies to price a
  product according to season, geography (specific
  store location), local tastes, and past demand,
  by analyzing historical pricing and sales data.
• For the leftovers the pilot showed a 25 percent
  increase in its gross margin previous years,
  while its payroll costs fell by 24 percent and
  the percentage of unsold goods at the end of each
  cycle fell from seven percent to two percent.

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1. Evaluate the role of information systems in
the way ShopKo and Pamida run their business. How
important are they?(2)

• The warehouse was expanded from 200,000square
  feet to 418,000squuare feet, but the warehousing
  software was neither updated nor replaced.
• The estimated loss in sales for the 107 stores
  served by the Lebanon distribution center was 5
  million, lagging 5 percent behind sales for the
  remaining 122 stores in the chain.

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2. Evaluate the importance of Pamidas
distribution center consolidation project for
both Pamida and ShopKo. What management,
organization and technology factors prevented
Pamidas new distribution center from working
successfully?(1)

• organization
• When ShopKo purchased Pamida, the chain had a
  total of about 180 stores, although that number
  increased to 229 stores in 16 states when ShopKo
  purchased the P.M. Place chain of 49 small town
  Midwestern stores in may 2000 and merged it into
  Pamida.
• Pamida had too many out-of-stock items. To make
  matters worse many key products were in
  warehouses even though they were not on store
  shelves.

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2. Evaluate the importance of Pamidas
distribution center consolidation project for
both Pamida and ShopKo. What management,
organization and technology factors prevented
Pamidas new distribution center from working
successfully?(2)

• management
• Pamida management turnover contributed, with the
  CEO.
• technology
• Pamidas warehouse management software was not
  updated the rest of the warehouse was modernized
  because the software had been working fine under
  the old system.

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3. Are ShopKo and Pamida using information
systems effectively? Why or why not? How much
value do their systems provide to the business?

• Markdown Optimizer used effectively. This system
  increase gross margin and decrease leftover rate
• Immediately expanding warehouse created serious
  bottlenecks in Pamida warehouses. But the company
  had never update the warehouse management
  information system software. So this system
  caused damage to the company.

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4. If you were the CEO of ShopKo, how would you
have addressed the problem? If you were the CEO
of Pamida when it was purchased by ShopKo, would
you have solved the problem?

• If we were the CEO of ShopKo, we cooperated with
  pamida because consolidation has some risk.
• Pamida had too many out-of-stock item. So we
  expanded warehouse and updated warehouse
  management information system.

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5. What management challenge does this case study
illustrate? Explain your answer.

• We must use the information system the right time
  in the right place. According to this case, wrong
  decision caused loss margin, frequently change
  management, or unsuccessful company.