What tools would you use to solve this costly issue

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Reference no: EM132143411

A company currently has a warehouse capacity of storing 5,000 pallets. Finished Goods occupy 1,700 of those pallet positions and the rest are occupied by work-in-process or component items. Only a maximum of 80% or 4,000 of those pallet positions (storage locations) can be used at any given time due to safety reasons. Due to a high volume of items requiring storage, there is a need for this business to rent additional off-site warehouse space and use it to store 700 pallets. This amount is always fluctuating. The cost is $13/pallet monthly and the company therefore spends approximately $109,200 annually on this additional storage. This business ships 2,300 pallets / month so there is a high turnover of the pallet positions. There is approximately a two week advance notice of what is being shipped at any given time. Objective: Eliminate the need for the use of any and all off-site additional warehouse space with the current business conditions and therefore save the company $109,200 annually. Potential Tools at your disposal: • Kan Bans • Safety stock levels negotiated by customers • Lead times for products promised to customers • Re-usable packaging – cartons vs. totes • Adjustable racking for additional storage • Use of large cartons (gaylords) as opposed to cartons (24 or 30 per pallet) • Adjustment in the amount and frequency of overseas shipments from Europe Assignment: Please develop a rational or algorithm to solve this problem. There are obviously many solutions but how can this be done in a one-year time interval? What tools would you use to solve this costly issue? Please consider what is being done and describe the potential to other areas of the business, for example Sales or Customer Service. Whenever possible please apply any quantitative analysis and if data is needed but not presented then please describe how you would acquire this data and how would it be used to solve this problem.

Reference no: EM132143411

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