Durable Glove, Inc. faces a common problem. The traditional reporting system does not capture a valid measure of customer profitability. The reporting structure no longer captures how customers consume resources differently throughout the value chain. Their value chain begins in Asia and ends at the United States (U.S.) retail storefront. Management is searching for a better reporting solution in their efforts to increase shareholders' value.
In this case, you make an important recommendation to Durable Glove's management. Should management decide to keep or to fire the Big Box retailer? You base the recommendation upon allocations and customer profitability reports that show how customers consume resources differently. The spreadsheet template1 that complements this case provides a structure for the allocations and reports. The completed reports capture an approximation of Durable Glove's customer profitability. You evaluate the reports and make a recommendation to improve Durable Glove's customer profitability, which focuses on keeping or firing the Big Box customer.