Hershey's chocolate needs special handling when the weather is warm. Chocolate begins to melt around 75 degrees Fahrenheit, so the ideal temperature range for the storage of chocolate is between 55 to 75 degrees Fahrenheit. Temperatures under 55 degrees Fahrenheit increases the risk of breakage and the possibility of condensation forming on the surface which can result in a bad appearance after it dries. To insure that our customers receive their chocolate gifts without melting, all shipments from April through September require "Warm Weather" shipping. "Warm Weather" shipments are the most costly kind of shipments that Hershey Direct deals with due to the added labor, materials, and level of delivery service required. To prevent melting, these shipments, regardless of their U.S. destination, must be delivered to our customers the very next morning from the day that they leave the Hershey Direct facility.

The mode of transportation for "Warm Weather" shipments is UPS's Next Day Air delivery service. This service guarantees that orders are delivered before 10:30 a.m., and this guaranteed service is very costly compared to the ground delivery service. In some cases, the customer is not home at the time of delivery. In these cases, the carrier will leave the package at the destination, leaving the product exposed to the heat. This is a risk for Hershey Direct because there is a possibility that the chocolate will melt before the customer gets to their package.

As stated above, "Warm Weather" shipments also require special packaging materials. All of our catalog items are initially packed in their own boxes. When we get a "Warm Weather" order, we take all the items for that order and repack them into an additional box with bubble wrap, and an ice pack. So, all the items for that order are packed twice. This process increases costs due to the added labor and materials. The ice packs last for 24 hours, and all of our shipments are prepared for shipping beginning at 12:30 p.m.. All orders leave the Hershey Direct facility by 4:00 p.m..

In 1998, our warm weather shipping period extended up until October because of unusual warm temperatures. From April through October of 1998, we shipped in excess of 5,000 "Warm Weather" shipments throughout the United States.

The May '99 kick-off for the new Internet site introduced even more challenges. To avoid customers not buying our products due to the high shipping costs, Hershey Direct charges Internet customers ground delivery prices while still using the more costly next day service. Hershey Direct will realize a loss for each of these orders because of this variance.

The reasoning behind this strategy is to get as much positive exposure to our web site as possible by offering customers reasonable shipping rates. This strategy was designed to encourage new customers to purchase items during the summer months.
 

*The web site address for Hershey Gifts is http://www.hersheygifts.com

*The average labor time required to prepare and ship a "Warm Weather" shipment is estimated to be five minutes, as opposed to one minute for a regular shipment. An employee earning $7.00/hr performs these duties. This process is manual because the volume does not justify the high capital costs required for automation.

*The typical next-day rate that Hershey Direct pays for a three pound package going to zone four is $12.97. The same package going the regular ground service would cost $4.56; a difference of $8.41. Customers are charged a percentage of the total merchandise plus an added charge for the service used.

*Average shipping weights during the warm months range from eight to fifteen pounds.

*All packages are shipped in six-sided boxes. Sizes can range from 13"x13"x5" to 20"x15"x13".

*Average cost of materials per "Warm Weather" shipment is as follows: ice pack ($.35), original shipping box(s)($.50), additional box ($.30), bubble wrap ($.20). Average total cost of materials per shipment = $1.35.

*Occasionally, depending on the size of the order, some packages need two ice packs to keep the chocolate cool. This increases materials and cost to $1.70 for large shipments.

*The distribution of all shipments are as follows: zone two (i.e. PA, NJ) 26%, zone three (i.e. CT, OH) 15%, zone four (i.e. ME,SC) 12%, zone five (FL, AR) 22%, zone six (i.e. ND, TX) 8%, zone seven (i.e. CO, MT) 3%, zone eight (i.e. CA, NV) 1%.

*Photocopies of warm weather shipping materials used by Hershey Foods and several other firms which ship heat-sensitive products are available by contacting Dr. Colleen Willard-Holt at (717) 948-6208 (office) or by e-mail cxw20@psu.edu. These photos are available so that you won't waste your time researching materials and procedures that we have already considered.

Research various potential alternatives for packaging and delivering Hershey Direct products for "Warm Weather" orders. If possible, conduct tests and provide copies of any test result data along with your written entry.
Develop cost effective methods that Hershey Direct could use to reduce costs for labor, materials, and shipping for "Warm Weather" shipments. Estimate a cost to implement each method.

If you are selected to give an oral presentation for this problem, the presentation will be held at Hershey Foods Technical Center, Hershey, PA.  You will be given directions and notified of the exact date and time later.

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