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Students Study Cookie Economics

December 20, 2000

STATE COLLEGE, Pa. (AP) _ A team of MBA students at Penn State University’s Smeal College of Business has a recommendation for area Girl Scouts _ a slight change in the way the girls order cookies could mean more dough all around.

Two Girl Scout councils representing girls in Pennsylvania and Maryland asked the college to help them find ways to save money on the delivery of more than 2 million boxes of cookies every year.

``We’re Girl Scouts,″ said Randy Kline, executive director of the Hemlock Girl Scout Council, which serves 15 counties in central Pennsylvania. ``We have expertise in knowing about girls and their interests and needs in terms of providing programs to them. But we don’t pretend to have knowledge in the delivery of products and such.″

That’s where Penn State came in. The Hemlock and Penn Laurel councils, which formed a buying consortium to save money, asked the university’s Center for Logistics Research to find ways to cut costs on cookie delivery. From there, it was turned over to a team of six MBA students for a class project.

Bill Steiniger, the student project leader, said the councils place a large order after their initial sale in January, ``but they’ll keep on selling through the month of February, then place a second order for small amount of cookies.″

That second order makes up just 4 to 5 percent of the councils’ sales, Steiniger said, but costs around $10,000 to deliver _ 16 percent of the total delivery cost.

``That’s a huge amount of money they’re paying for their inefficiencies,″ he said, estimating they could save between $7,000 and $9,000 by eliminating the second order.

That’s money that could be returned to the girls. After paying to buy and ship the cookies, all of the money from cookie sales stays within local troops and councils.

Cookie sales make up almost 60 percent of the Hemlock council’s budget. Each troop gets 45 cents per box from sales, and through the ``Cookie Dough″ program girls are allowed to put a portion of their sales toward the cost of camps or other activities.

And cookie sales are about more than dollars and cents, said Nancy Bryant, executive director of the Penn Laurel Girl Scout Council, which serves seven Pennsylvania counties and the Frederick, Md., area.

``The cookie sale does give girls the opportunity to learn about marketing their product, keeping records, planning _ there are so many things that are learned,″ Bryant said.

But it was cash considerations that brought the girls to seek Penn State’s help.

Steiniger says switching to a single sale is a no-brainer, even if the councils overestimated and ordered too many cookies. They could be left with thousands of boxes of unsold cookies and still not pay as much as they are paying to deliver the late order.

Besides, he said, they couldn’t go to waste: ``I don’t think anyone would throw away Girl Scout cookies. I think anyone would buy them.″


On the Net:

Penn State University Smeal College of Business Administration: http://www.smeal.psu.edu/

Girl Scouts of the United States of America: http://www.gsusa.org/

Hemlock Girl Scout Council: http://www.hgsc.org

Penn Laurel Girl Scout Council: http://www.pennlaurel.org

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