Part Number, Part Unit Value In Quantity Currently In Invent

Part Numberpart Unit Value In Quantity Currently In Inventoryaverage

Part Number part Unit Value In Quantity Currently In Inventory average

Part number Part unit value in $ Quantity Currently in Inventory Average annual usage 1234 $2. $0. $15. $0. $7. $4. $1. $0. $17. $9. $3. $0. $1. $8. $5. $0. $6. $2. $1. $5. 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. Responsibility: 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. Randy 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. Facts #1236 is used for a product that has very cyclical demand, and the busy time of the year is near #1241 has a supplier with an erratic delivery history, and the part has a very long lead time. A lot of 150 has been on order for some time and is now several days past due #1240 and 1236 is shipped to a location on the other side of the country and is being accumulated into a large lot to save shipping costs. #1253 was recently subject to a quality audit, and almost 150 of the items were rejected as a result of that audit. Questions to Discuss with Students: What issues might concern Randy?

1. Part#1236 is more expensive with lots of inventory. 2. Part#1241 is inexpensive, yet the inventory is very small. 3. Part#1240/1236 is expensive with almost half a year's worth of inventory. 4. Part#1246 is not too expensive, with a low inventory. 5. Part#1253 is moderately expensive with a large inventory compared to usage. In-Class Activity: 1. Use the information to evaluate and provide a six-step approach to solving this problem. 2. Write an inventory control policy that Randy should consider. Step#1 Step#2 Step#3 Step#4 Step#5 Step#6. Source: Introduction to Materials Management; Stephen N. Chapman, J.R. Tony Arnold, Ann K. Gatewood, Lloyd M. Clive.

Paper For Above instruction

Effective inventory management is critical for manufacturing firms such as Johnson Trinket Company to balance operational efficiency with cost minimization. The case scenario involving Randy Smith, the inventory control manager, highlights distinct challenges with different parts, including variability in demand, supplier reliability, cost implications, and quality control. This analysis will discuss the issues prompting concern and propose a structured six-step approach to develop an effective inventory control policy suitable for the complex environment described.

Initially, Randy faces the issue of balancing inventory levels for parts like #1236, which, despite their high unit cost, accumulate substantial stock, potentially increasing holding costs without commensurate benefits. This points to the importance of implementing ABC analysis to categorize parts based on criticality and value, allowing focused management of high-value items while applying more flexible controls for low-value parts (Krajewski & Ritzman, 2014). For example, #1236, with its elevated unit cost and sizable inventory, should be classified as an 'A' item, demanding tight control and monitoring.

The situation with #1241 illustrates the concern over low inventory levels despite its low unit cost. Its predictably cyclical demand warrants an adaptive safety stock policy, aligned with forecasting techniques such as moving averages or seasonal indices, to prevent stockouts during peak periods (Chopra & Meindl, 2016). Additionally, understanding demand variability and lead times is vital to adjusting reorder points dynamically.

Items like #1240 and #1236, which are expensive but currently held in large quantities, raise concerns about overstocking and the possibility that inventory may become obsolete or costly to carry. A just-in-time (JIT) approach or economic order quantity (EOQ) calculations could optimize order sizes, reducing excess inventory while ensuring timely replenishment (Heizer & Render, 2017). Regular review of inventory turnover rates and obsolete stock levels is essential for controlling costs.

The case of #1246, characterized by low cost and low inventory, signifies a potentially low-risk item that might be managed with automatic reorder points or reorder point systems that trigger replenishment before stock depletes, thereby minimizing stockouts with minimal oversight (Nahmias, 2013).

The quality issues surrounding #1253, which experienced a substantial rejection rate following a quality audit, underscore the importance of integrating quality control into inventory management. Establishing supplier quality agreements, conducting incoming inspections, and maintaining buffer stocks can mitigate the impact of defective items from disrupting production (Chen & Paulraj, 2004).

The six-step approach to developing an effective inventory control policy involves: 1) Data collection and analysis of each part's demand patterns, costs, and lead times; 2) Classification of inventory into appropriate categories; 3) Determination of reorder points and order quantities using EOQ or similar models; 4) Development of safety stock policies based on demand variability and lead times; 5) Establishment of supplier management programs emphasizing quality and delivery reliability; and 6) Continuous review and improvement of inventory management practices through regular performance metrics and feedback.

In conclusion, Randy's proactive approach toward understanding and managing inventory in his section provides a strategic foundation for reducing costs and preventing stockouts. Incorporating analytical techniques, category-based management, and supplier collaboration ensures robust inventory control tailored to the specific challenges faced by Johnson Trinket. Adopting these measures will facilitate scalable and resilient supply chain operations across the company's extensive inventory pool.

References

• Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.
• Heizer, J., & Render, B. (2017). Operations Management. Pearson.
• Krajewski, L., & Ritzman, L. (2014). Operations Management: Processes and Supply Chains. Pearson.
• Nahmias, S. (2013). Production and Operations Analysis. Waveland Press.
• Chen, I. J., & Paulraj, A. (2004). Towards a theory of supply chain management: The constructs and measurements. Journal of Operations Management, 22(2), 119-150.
• Introduction to Materials Management; Stephen N. Chapman, J.R. Tony Arnold, Ann K. Gatewood, Lloyd M. Clive.