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Michigan Liquor control commission * Please read Attached document answer questions end.
Alternative designs for distilled liquor distribution
The manufacturer could be allowed to store the liquor and deliver directly to the retailers when they place an order. The retailers would be placing orders directly to the manufacturer when their stocks decrease. Centralizing all the inventories at the manufacturer will allow the manufacturer to keep track of stock levels Chopra & Meindl, 2012.
The manufacturer would be able to identify demand of the liquor. Using this method the manufacturer is able to determine the products that are required in the market. Another method that can be used is the distributor storing the liquor and delivering to the retailer using carriers. Having multiple distributors to store the liquor ensures that retailers have a choice of where to place an order. Providing retailers with multiple places to pick or place orders increases competition and reduces the price for the product. In the case of Michigan having the commission been the sole distributor to the retailers has made the price of liquor to be determined by the commission. This does not provide room for competitive prices.
Benefits and risks of alternative designs for distilled liquor distribution
Using alternative designs for distributing the liquor...
The state will also collect more revenue as more people will be able to afford the liquor. Alternative distributions will also reduce the cost for the manufacturer as they will store the product in their warehouse, and only ship them when retailers place orders. The manufacturer's costs can be reduced if the retailers come to collect the liquor directly from their warehouses. This way the cost of freight will be reduced as the retailers will cater for the transportation costs. The risks in these designs are that retailers can start charging more for the liquor, which would result in reduced sales. Retailers are also prone to competition from each other and this could reduce the cost of liquor and encourage more drinkers. There will be no control for retailers as they have the chance to purchase the liquor from the cheapest distributor. Competition can also result in customer abuse by the competitors.
Importance of the historical conditions today
The historical conditions that necessitated the liquor distribution systems are not important today. This is because the distribution system is too costly for the manufacturers and the retailers. The system has also made the overall price of liquor to increase, which makes it difficult for consumers to purchase the liquor. The charges charged by the…
References
Chopra, S., & Meindl, P. (2012). Supply Chain Management: Strategy, Planning, and Operation. Upper Saddle River, NJ: Pearson Education, Limited.
Sjolander, R., & Kakela, P. (1988). Michigan's Mandatory Beverage-Container-Deposit Law: Economic Effects of a Public Policy on Industry Sales. Journal of Public Policy & Marketing, 7(ArticleType: research-article / Issue Title: Special Issue on the FTC / Full publication date: 1988 / Copyright © 1988 American Marketing Association), 166-184. doi: 10.2307/30000299
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