Managing Business Operations
Case Analysis: Blanchard Importing and Distributing Co. Inc. (HBS Case 9 - 673 - 033)
Submitted by: Tushar Kothavale (130)
NMIMS, FT MBA 2009-2011
1) Correct the Economic Order Quantity (EOQ) and Reorder point (ROP) quantities for each of the five items mentioned in the case.
We first predict the annual demand for the year 1972 based on trend for 4 months of 1972 based on corresponding months of 1971.
Calculations for Annual demand (R):
The assumption made here is that the same trend for sales as that for the four months of
1972 would be followed for the rest of the months of the 1972.
Sales prediction for annual demand for year 1972
Total Sales
Feb
Mar
Apr
May
1971
1972
128
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Which system do you prefer?
EOQ/ ROP system:
Advantage1) The system achieves the balance between two costs ordering cost and the carrying cost. 2) The system keeps track of removals from inventory on a continuous basis, so the system can provide information on the current level of inventory for each item
3) The system helps meet the anticipated customer demand.
4) The system keeps buffers between successive operations to maintain continuity of production (reducing the variability in demand at various stages).
Disadvantage1) EOQ/ROP system is essentially a reactive approach; this approach gives only an order quantity, it does not suggest ways to reduce the inventory.
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2) For implementation of EOQ a perpetual inventory counting system needs to be in place, this implies substantial investments which might not be feasible for some.
3) Even if EOQ system is in place there is necessity to physically count the inventory periodically in order to ascertain the accuracy of the system.
4) EOQ/ ROP is a static system that is, it does not change automatically with the change in demand. For every period a new EOQ/ ROP needs to be established.
5) It is valid for a single product and not a basket of products. (Assumption made while deriving the EOQ/ ROP.)
6) It does not take into account
In accordance to the annual report of Woolworths Limited 2016, the current accounting practice that is applied to the business regarding its inventory disclosure includes; a perpetual inventory system which continually updates the information by increasing or decreasing inventory from reports throughout the year to verify accounting records (Bragg 2016). A perpetual inventory system in comparison to a periodic inventory system is more efficient and effective for larger corporations. With entities like Woolworths, many transactions occur between themselves and other stakeholders, so by utilising a perpetual inventory system, it saves time and also money (Woolworths 2016)
Perpetual Inventory System: when using this system, you can update the inventory account on a regular basis. The account can be increased or decreased at any time depending on whether it is a purchase or sale of merchandise that has occurred. Under this system, the purchases account does not exist and there is a cost of sales account.
1) Prepare the manufacturing staff’s calculations for the three alternatives (please refer to the attachments):
Case Study of case 69 A.D.3d 413: Yun Tung Chow vs. Reckitt & Colman, Inc.
M international (M) and W Inc (W) decided to enter a long term litigation, due to a patent rights violation. M being the demandant and W the respondent. Not enough information was provided in relation to the charges or the patent.
2 List the three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory?
4. What problems under the old system are solved or mitigated by the new system?
Case Analysis: Blanchard Importing and Distributing Co. Inc. (HBS Case 9 - 673 - 033)
Greaves provided five years and two months of annual sales data. Using Stat Tools, the following analysis were run: Moving Average, Exponential Smoothing Simple, Exponential Smoothing Holt’s, and Exponential Smoothing Winter’s. Following a comparison on the average on all models, the Exponential Smoothing Winter’s was found to be the most suitable model for the case. A graph
I have taken it upon myself to test two inventory management systems and have found a system that will yield the least cost to Parts Emporium Inc. The two systems I have tested are the Continuous Inventory System and the Periodic Inventory System. Using data that I have gathered from the products DB032 and the EG151, I have compiled calculations and have concluded a continuous inventory system would be best for our corporation. Attached you will find said calculations; I would like to take this moment and present the continuous inventory system and recognize all of the relevant costs. The following is an explanation of each calculation under the continuous inventory system:
Sales for the year will be consistent with the previous year (only a small decrease)
II. When price falls from 4 pounds to 3 pounds the demand for travel increases to 80,000 units- At the original market price of 4 pounds the demand for travel was 60,000 units generating revenue of 240,000 pounds. When the price is reduced to 3 pounds the resulting demand is 80,000 units and this also generates income of 240,000 pounds. When market price changes and the resulting revenue remains the same it can be said that price elasticity of demand is unitary in
Case Analysis: Blanchard Importing and Distributing Co. Inc. (HBS Case 9 - 673 - 033)
This case was prepared by Professor Stephen E. Barndt of Pacific Lutheran University. This case was edited for 5MBP 9th Edition. Copyright C 1998 and 2000 by Stephen E. Barndt. This case was published in the Business Case [ourn Summer 1998. Vol. 1. No. t. pp. 53-{}9. Reprinted hy permission,
Moore v. Midwest Distribution, Inc., 76 Ark. App. 397, 65 S.W. 3d 490 (Ark. Ct. App. 2002)