Reference no: EM133594482

Inventory is a critical asset, especially in manufacturing process. The management of a firm's inventory ultimately affects the firm's profitability and value of service to its customers. Stanley Chew manages a service part centre in Loyang Avenue for Hichito Inc., a Japanese brand of electronic home appliance. A customer calls the Hichito's service hotline to report a mechanic problem with the home appliance. Hichito's after sales service department will send a contract technician to the customer site to inspect the faulty appliance. If there is a need for replacement, the technician will call the service part centre to arrange a replacement. For some critical parts like electric motors and control board, Hichito sets a lead time requirement such that the replacement should be completed within a few hours. For non-critical parts, the lead time requirement can be as long as a few days. If a replacement request is made to the service part centre and there is insufficient stock, it will be marked as a stockout incident and reflect negatively on Hichito's customer service. However, sometimes the stockout can be an inventory accuracy problem. For example, there is physical stock in the rack but it shows zero quantity in the system, or it shows available units in the system but no physical stock in the rack. The inventory accuracy problem can be due to multiple reasons - misplacement, lost count, loss in transportation, or incorrect product information (e.g., part number, batch number, etc.).

The service part centre houses a total of 97 SKUs. Each SKU is a unit part number. To minimise inventory inaccuracy, Stanley mandated his warehousing employeesto do a weekly cycle count for all SKUs. The cycle count is normally conducted during non-peak hours when employees are not so busy. The cycle count is conducted progressively, i.e., the employees do not need to complete the cycle count for all SKUs in the same day. For example, they can cycle count 31 SKUs on Monday, another 40 SKUs on Wednesday, and remaining 26 SKUs on Thursday. The cycle count proceeds as follows: a warehouse employee checks and records the quantity of a SKU in the physical stock; if this quantity tallies with the quantity in the system, it is marked as "accurate" for that SKU in that cycle count; otherwise, it will be marked as "inaccurate". Stanley would like to conduct an analysis on inventory accuracy. He collects 52 weeks of cycle count data and order fulfillment rate for all 97 SKUs. The cycle count accuracy is the percentage of cycle counts that are marked as "accurate". For example, for a SKU, if out of 52 cycle counts, 45 are marked as "accurate", the percentage is 45/52 = 86%. The order fulfillment rate of a SKU is the percentage of orders without stockout within the 52-week period.

(a) Analyse and examine inventory accuracy and order fulfillment data according to the following requirements:

(i) Based on the observation on the dataset given, is there any abnormality and suspected data inaccuracy in the data set? If yes, how would you deal with these data integrity issues? Justify your approach if necessary.