Penya Barcelonista in London[1]

The Penya Barcelonista in London, located in Kensington[2] is a traditional site where Barça (officially Futbol Club Barcelona[3], FCB) fans in the UK get together to celebrate the victories and discuss defeats of his football team. In addition, it operates as a regular bar, open seven days per week, to help maintain a stable income. In the last season (2005/06) the mood of the Barça followers has been excellent, as the team managed to win both the Spanish Premier league and the European Champions League. One of the best selling products in the Penya is cava[4]. Exception made of the days when Barça plays a match, the sales of cava are quite constant[5]. One of the best selling cavas has a label combining blue and red colors, the traditional colors of the FCB.

Jordi, the bar manager, purchases this cava directly from a supplier in el Penedes, in cases containing 12 bottles. The purchasing process is quite straightforward: when Jordi closes the bar every night, he checks the number of bottles left in the warehouse, and makes a decision on whether to place an order or not. If he decides to do it, he sends a fax to the supplier, indicating the number of cases to purchase. The supplier accepts regular and urgent orders. A regular order is delivered in four days, while an urgent one is delivered in only two days. That is, if Jordi sends a fax on Tuesday night, the cases are received on Saturday, usually late in the day, and therefore, Jordi can only count on this order to satisfy the demand on Sunday. Similarly with urgent orders. The supplier also works seven days per week.

Jordi’s boss and the culés (name given to the followers of FCB), would never accept a stockout of cava. Jordi knows that if this ever happened, he would be fired immediately. Since he is happily employed, he will do what it takes to avoid this. However, keeping inventory of cava has also some important costs, mainly financing costs, but also minor pilferage and damage to the bottles. Jordi estimates that the annual cost of keeping an inventory of cava amounts to 20% of the stored value. The warehouse is located next to the bar and has a capacity to store up to 60 cases of cava. Jordi has no space to store any more inventory.

The supplier charges Jordi a fixed cost per order, 8 Euros, as an administration cost. The negotiated prices per bottle of cava are 7 and 14 euros for regular and urgent orders, respectively. This price is inclusive of transportation costs. Order quantities must be for whole cases, that is, multiple of 12 bottles.

Exhibit 1 shows data on demand for the last 100 days, when there were no special football matches, while Exhibit 2 shows a statistical analysis of this demand. Jordi want to use these data to define a purchasing policy for cava to be able to maintain a low inventory level while ensuring no stockouts.

Exhibit 1

Recent cava demand

Day / Demand / Day / Demand / Day / Demand / Day / Demand
1 / 45 / 26 / 47 / 51 / 19 / 76 / 32
2 / 45 / 27 / 52 / 52 / 50 / 77 / 56
3 / 73 / 28 / 59 / 53 / 57 / 78 / 38
4 / 50 / 29 / 44 / 54 / 46 / 79 / 36
5 / 65 / 30 / 54 / 55 / 55 / 80 / 49
6 / 51 / 31 / 80 / 56 / 48 / 81 / 33
7 / 62 / 32 / 71 / 57 / 26 / 82 / 45
8 / 38 / 33 / 50 / 58 / 31 / 83 / 44
9 / 61 / 34 / 58 / 59 / 29 / 84 / 40
10 / 56 / 35 / 29 / 60 / 52 / 85 / 42
11 / 61 / 36 / 55 / 61 / 52 / 86 / 63
12 / 37 / 37 / 34 / 62 / 64 / 87 / 46
13 / 48 / 38 / 48 / 63 / 66 / 88 / 48
14 / 77 / 39 / 54 / 64 / 58 / 89 / 65
15 / 64 / 40 / 46 / 65 / 46 / 90 / 68
16 / 53 / 41 / 41 / 66 / 67 / 91 / 30
17 / 39 / 42 / 84 / 67 / 47 / 92 / 55
18 / 33 / 43 / 36 / 68 / 44 / 93 / 64
19 / 12 / 44 / 60 / 69 / 46 / 94 / 44
20 / 60 / 45 / 55 / 70 / 58 / 95 / 38
21 / 59 / 46 / 36 / 71 / 55 / 96 / 47
22 / 42 / 47 / 51 / 72 / 75 / 97 / 71
23 / 62 / 48 / 68 / 73 / 44 / 98 / 52
24 / 52 / 49 / 49 / 74 / 61 / 99 / 53
25 / 37 / 50 / 44 / 75 / 40 / 100 / 28


Exhibit 2

Statistics on cava demand (normal days)

Average daily demand / 50.1 bottles
Daily demand standard deviation / 13.2 bottles
Minimum daily demand / 12 bottles
Maximum daily demand / 84 bottles


Preparation questions

The simulation-exercise Penya Barcelonista in London will help us practice the fundamentals of inventory management. Alter studying the case, try to focus on the following questions:

1.  Which criteria should be considered when deciding a purchasing policy in general. How does this apply to the Penya Barcelonista case?

2.  Get yourself in the position of Jordi. Imagine you will be away for 40 days and a friend of yours will be in charge of purchasing cava bottles. Prepare a written set of instructions for your friend on how to handle the purchasing job.

3.  Now, put yourself in Jordi’s friend position. You have just received the instruction prepared by Jordi. Use the instructions to handle bar purchasing for the next 40 days. Unload the Excel simulator[6] and follow strictly the instructions received from Jordi to decide on orders.

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[1] Exercise prepared by Profs. A. Done y J. Ribera, IESE Business School.

[2] Location and names have been disguised.

[3] More information on the football team is available on http://www.fcbarcelona.com/

[4] Cava is the name of a type of white sparkling wine, produced mainly in the Penedès region in Catalonia, (Spain), 40 km to the south west of Barcelona. Its name is derived from the Catalan word for cellar. In 1872, Josep Raventós, after seeing the success of the Champagne region, decided to create this dry sparkling wine. In the past it was known as “champagne” (champaña or xampany) but as the use of this name is only allowed for products made in the French Champagne region, the local Catalan wine is now called “cava”.

[5] On days when there is a football match, Jordi’s forecasting and ordering system is completely different. We are not going to consider this situation on this exercise.

[6] The Excel Simulator uses macros. You must ensure that macros are enabled in your computer. To do this, when in Excel, go to the Tools menu, display Tools>Macro>Security and select “Medium”. Then reload the program.