Inventory is out tot control, as 60 days of part are on stock but customer service still struggle to deliver on time. Exhaust Gaskets Simple way of Economic Order Quantity analyzes for above-mentioned components give already preliminary answer, Gaskets are ordered with ISO PC lot size what generate annual ordering cost of 707$ and holding cost of 139$. Total 846 LESS annual inventory cost of the item. Implementing orders policy according to EX. that the total cost may drop 626 SAID, 26% saving only for that one item present interesting alternative.
Drive belts Drive belts product EX. analyze present as follow: current total inventory cost is 512 (1000 as lot size) With 275 ordering cost and ASS$hooding COSt_ That total an be cut to 229 USED with 236 PC as lot size, even if ordering cost will grow to I SIS, holding cost Will drop from 4855 to 114$. 55% saving on drive belts that the option to go for by EX. implementation. For Sue Mackey that two items are just examples how company may handle inventory for extensive product line. 000 square feet new warehouse can be manage in much more effective way where ordering and holding cost optimization will drive whole company to better performance of customer satisfaction and more flexible reaction to market needs. Material Management as a new position on Parts Emporium may quickly gain importance and respect in eyes of team members and two owners, Dan Block, and De Springs. As they have understood already importance of supply chain management with decision to hire a dedicated person now, they can recognize what potential tort company development it represents. Step 1: Identify the problem(s) and uncertainties.
What exactly is the problem_. , Inventory management is out of control even with relocation of company and new 100 000 square feet warehouse introduction The problem is this Although 60 days average inventory is on hand company experience parts in delivery backlog and is not able to deliver competitive customer service. This is an important problem because… Parts Emporium is distribution company and optimizing supply chain and build effective connection between parts suppliers and final customers should be the key The key question(s) that needs to be answered to solve this problem is… What are total inventory cost for selected items?
Whether that cost can be improved or not? Is policy of EX. possible to introduce in the company’step 2: Obtain information. The following information is needed to answer this questionћ. Specific items detailed info needed: lot sizes, demand, order cost, unit holding cost Some important assumptions am using in my thinking are… Am assuming that selected two products, gaskets and drive belts represent overall situation also on other products. The points of view relevant to this problem belong to… Mainly two owners Dan Block and De Springs, but also Other company employees and customers as well.
Step 3: Make predictions about the future. If this problem gets solved, some important implications are… Overall optimization for inventory cost in the company can be achieved, finally better customer flexibility and service as well, If this problem does not get solved, some important implications are… Even if Parts Emporium is market leader in the region their position can be only weaker. Sales have stagnated recently, but without material policy implementation it can take downturn direction. The potential alternative solutions to solve the problem are…
Limiting company offer to just few best rotating auto parts and avoid extension of activity. Note: if the problem is one-dimensional, there may be just one correct solution. Step 4: Make decisions by choosing among alternatives. What is the best solution and whyћ, The best solution is proposed operation based on EX. It will guarantee better cost of inventory, but also better warehouse utilization and open chance to extent company offer. Step 5: Implement the decision, evaluate performance, and learn. In business, the fifth Step in the decision making process is implementation.
In the MBA program, most times you will end with Step 4 since you will not have the opportunity to implement. You may be asked to develop an implementation plan and recommend how you will evaluate performance in some assignments. Brief 4 Rubric Total 75 points Criteria Unacceptable Acceptable Proficient Student Score and Comments Develops an opening paragraph that introduces the case, Vaguely develops an opening paragraph that introduces the case or does not have an opening paragraph. (C-3 points) Develops an opening paragraph that introduces the case and, for the most part, fulfills assignment requirements. 4 points) Develops an opening paragraph that introduces the case and demonstrates solid ability to accomplish the assignment. (S points) Discusses the issues facing the company due to their inventory problems. Vaguely discusses the issues facing the company due to their inventory problems or completely off the topic. (C-7 points) Discusses the issues facing the company due to their inventory problems and, for the most part, fulfills assignment requirements. (8 points) Discusses the issues facing the company due to their inventory problems and demonstrates solid ability to accomplish the assignment. -10 points) Recommends how to manage the inventory of the two products that includes all relevant costs. Vaguely recommends how to manage the inventory of the two products that includes all relevant costs or completely off the topic. (C-al points) relevant costs and, for the most part, fulfills assignment requirements. (12-13 points) Recommends how to manage the inventory Of the two products that includes all relevant costs and demonstrates solid ability to accomplish the assignment. (14-15 points) Analyzes how much the costs will be reduced if the recommended inventory management system is implemented.
Vaguely analyzes how much the costs Will be reduced if the recommended inventory management system is implemented or completely off the topic. Management system is implemented and, for the most part, fulfills assignment requirements. Management system is implemented and demonstrates solid ability to accomplish the assignment. Integrates established operation management principles into the discussion. Rarely integrates established operation management principles into the discussion. (0-7 points) For the most part, does a good job of integrating established operation management principles into the discussion.
Consistently does a good job of integrating established operation management principles into the discussion, (9-10 points) Synthesizes relevant information and materials to provide evidence Of critical thought. Synthesizes information at a minimal level. For the most part, effectively synthesizes information, which supports main ideas. Consistently and effectively synthesizes information, which provides strong support to main ideas. Develops ideas with clarity and logic. Demonstrates little clarity and logic. Readers have difficulty following the line of seasoning. 0-3 points) Develops ideas With clarity and logic. Readers can generally follow the line Of Develops ideas with clarity and logic. Ideas flow smoothly from one to another and are clearly linked to each other. (5 points) Uses supporting documentation that has been properly references and cited. Inadequate or minimal use of supporting documentation or not properly referenced or cite For the most part, uses supporting documentation that is properly referenced and cited. Consistently uses supporting documentation that is properly referenced and cited.
