Reference no: EM131028029

Project

Randy Smith, Inventory Control Manager. Randy Smith was very proud of his new position as inventory control manager for the Johnson Trinket Company. His primary responsibility had been fairly clearly defined:

Maintain an inventory level in the warehouse that ensures that production will not run out of stock, yet also maintain an inventory level that will minimize inventory holding and control costs. Since Randy had recently had a course in materials management, he knew an approach that should help him. He decided to make a list of inventory items in one small section of the warehouse to see if he could develop a good plan for inventory control. If it worked in the one small section, he could expand it to the rest of the more than 30,000 part numbers in the warehouse.

The following is the data Randy compiled:

Part Number	Part unit value in $	Quantity currently in inventory	Average annual usage
1234	$2.50	300	3000
1235	$0.20	550	900
1236	$15.00	400	1000
1237	$0.75	50	7900
1238	$0.76	180	2800
1239	$4.40	20	5000
1240	$1.80	200	1800
1241	$0.05	10	1200
1242	$17.20	950	2000
1243	$9.00	160	2500
1244	$3.20	430	7000
1245	$0.30	500	10000
1246	$1.10	25	7500
1247	$8.10	60	2100
1248	$5.00	390	4000
1249	$0.90	830	6500
1250	$6.00	700	3100
1251	$2.20	80	6000
1252	$1.20	480	4500
1253	$5.90	230	900

When Randy scanned the list, he noticed several things that disturbed him, and he asked one of the experienced inventory clerks. The following list summarizes the part number issues that concerned Randy, and the explanation from the clerk:

Part number 1236, a very expensive part with almost half-a-year's worth of inventory.

This part is used for a product that has very cyclical demand, and the busy time of the year is about to start.

Part number 1241 is very inexpensive, yet the inventory is very small. This part has a supplier with an erratic delivery history, and the part also has a very long lead time. A lot of 150 has been on order for some time, and is now several days past due.

Part number 1242, like 1236, is expensive with almost half a year worth of inventory- this part is shipped to a location on the other side of the country and is being accumulated into a large lot to save shipping costs.

Part number 1246 is not too expensive, with a low inventory. This part is produced in-house, and has a quality tolerance that the older equipment, which was used to produce it, had a difficult time meeting. The last batch was rejected by the quality department.

Part number 1253 is moderately expensive with a large inventory compared to usage.

This part was subject to a recent quality audit, and almost 150 of the items were rejected as a result of that audit.

Once Randy understood some of the issues, suddenly he did not feel quite as confident that he had the best approach in mind to control the inventory to meet the expectations of his boss.

Assignment

(1). The information above to evaluate the current situation.

(2). Given your evaluation, try to develop an integrated inventory control policy that Randy should consider.

(3). Is there other information that you would like to see that might help you to make a more effective policy?

(4). If so, what would that information be and how would you use it to help you?

Instructions:

1) The research findings should be handed in before April 8th as a Word document using a font of 12 and spacing =1.5. 

2) Personalize the style of your text. Imagine you are generating a report to inform the audience it is addressed to or to answer the requirement of your manager.

3) Be clear and organized in your presentation of the text: use bullet points, tables and brief texts to convey your message.

4) The assignment will count for 20% of your final mark.

7) Plagiarism could lead to obtaining a mark of zero on the project.

8) Both of electronic and printed versions should be sent to me before the deadline.