Their current turnover rate is 4.Passenger service companies e. Therefore, it is concluded that company uses periodic inventory review policy. Graph 1: Exchange curve for inventory level and transportation cost 7 While exchange curves like given above can be used for the pairwise comparisons, weighted score model can be useful for an overall assesment of options Lecture 3, Slide These weights and the scores related to our previous investigations yield that the outsourcing the warehousing function to Global Logistics is the best alternative among all. View Details. Begin with the review type; although firm monitors the entire inventory transfers from Waltham warehouse to other warehouses; they think taking physical counts of inventory at all warehouses. Company can see their situation and make decisions according to priorities.
However, there is no sign that the company is implementing this policy because it is the best approach that must be taken for the company objectives. The initiative adopted by the company to increase the number of warehouses has resulted in increased expenses as well as increased inventory.
By doing these, simultaneously, approach of the warehouse management could be changed to a better position by changing policies related to them as it is tried in the past with different ways and failed Page 6, para.
All of investigations and cost studies conducted in this case study are to find the most cost effective option in order to getting closer to the target debt to capital ratio of the company and provide more capital to fund expansion into new international markets while maintaining or even improving the high customer satisfaction level.
This will help to company not to keep excessive amount of inventory and less tied-up money in the inventory which can be used in other areas.This implies that the money tied up in the inventory decreases and this extra capital can be used in other areas, like expansion plans to international markets. The curve shows the inventory and transportation cost levels as the number of warehouses changes. Inter-warehouse transshipments are calculated by bulk shipment rates and they are considered only when a stock-out occurs, therefore fill rate is included in these calculations , 41 2 warehouses — , when two centralized warehouses considered, it is assumed that Waltham will supply east region, Phoenix will supply will west region and they will equally supply the central region , 07 Outsourcing — when warehousing functions are outsourced, assuming the 5 regions of Global Logistics GL will have equal amount of demand , 83 To conclude, as it is expected, when numbers of warehouses are decreased transportation costs are increased. From the aspect of transportation costs, GL option has the smallest cost amount. This is just a sample partial work. The policy needs to be considered to ensure that warehouse managers are not abusing it by keeping higher levels of inventory. The authors may have disguised certain names and other identifying information to protect confidentiality. Any subject. While assessing the weights for factors, it is considered that average inventory level and the transportation costs are the most important costs for the company.
Furthermore, I will give recommendations to Scientific Glass, Inc. Scientific glass Inc.
The newly hired Manager of Inventory Planning is tasked with developing an effective strategy for managing inventory without requiring additional capital investment. Government agencies need procedures to track separately all inflows and outflows from various funds, to ensure that legal requirements about the use of specific funds are followed.Initiatives to be taken: 1 implement a computer system that consolidates the inventory tracking system with the manufacturing and operations system. This will help to company not to keep excessive amount of inventory and less tied-up money in the inventory which can be used in other areas. Their current turnover rate is 4. Weighted-average biweekly inventory levels are found as: 8 warehouses : 1 warehouse : Outsourcing : When outsourcing option is used, it will be the same for the company in the sense of kept inventory levels for the one-centralized-warehouse option therefore they are assumed to be equal. Steven C. Remember: This is just a sample from a fellow student. In this case study, production and operations management POM issues of a mid-size company, named as Scientific Glass Inc. Rather than using one fill-rate for over all products of the company, different rates for different products can help the company in decreasing inventory costs related to, at least, for some of the products. Students must complete a quantitative analysis of the costs and benefits of several alternatives. Resulting optimal fill rates are as follows: 1, 2, or 8 warehouses Outsourcing Griffin Fill rates and Additional costs and benefits Since all the products of scientific glass can be arrived out based on the analysis of its 2 products namely Griffin and Erlenmeyer, since they are mentioned as the best representative for a total of nearly products of Scientific Glass, all the parameters are analyzed for these products to arrive at a conclusion.
To conclude, as it is expected, when number of warehouses are decreased transportation costs are increased as can be seen from the Table 1 below. To calculate the optimal levels of fill rates for all four options the cost items which are added to underage and overage costs also needs to be considered.
Rather than using one fill-rate for over all products of the company, different rates for different products can help the company in decreasing inventory costs related to, at least, for some of the products. Holding more inventory levels than required results in increased inventory costs across all the warehouses.
Fraser Johnson solely to provide material for class discussion.