Cameron Balloons

2327 Words Feb 12th, 2008 10 Pages
Cameron Balloons is the world 's largest manufacturer of hot-air balloons. (http://www.cameronballoons.co.uk)
On average, their factory in the United Kingdom builds one balloon a day but together with their United States factory the company produces on average more than one balloon per day, everyday of the year. And in 1996 the company turnover was almost £7,000,000. (http://www.bized.co.uk)

From the operations manager 's point of view, inventories are a tool which provide efficient operation of the production facilities. There are no specific level of inventories which are more desirable as they are allowed to fluctuate so that production can be adjusted to its most efficient level. (Meredith & Shafer. 2007)

Effective inventory
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However, for the specialised hot-air balloons this is not possible but the basic materials are held in inventory. (Slack & Chambers. 2004)

Reducing costs are an aim in every organisation and thus another reason for Cameron Balloons to hold stock. Cameron Balloons benefit from bulk-buying in order to get the lowest cost possible for its materials but in return, they also have to be prepared to hold the stock for a period of time. The operations manager for Cameron Balloons decides to make infrequent large orders to reduce the number of orders made and also the associated costs to do with administration and handling costs. Hence the long production runs will help cut down production costs for the company but holding large inventories is a must for this. (Slack & Chambers. 2004)
Other advantages to this are that this enables Cameron Balloons to spread the costs of purchasing the materials over a large number of input units and also to purchase the materials in advance avoiding any price increases that may occur in the near future.

Cameron Balloons are the leader in the hot-air balloons market which is a very competitive market and has suffered from "over-capacity". Thus this is more of a reason for them to be efficient and vigilent on the costs and how much they compare to their competitiors.
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