Scientific Glass, Inc.: Inventory Management Essay

706 Words May 29th, 2011 3 Pages
Scientific Glass, Inc.: Inventory Management

Executive Summary

Scientific Glass (SG) provides specialized glassware for a variety of organizations such as pharmaceutical companies, hospitals, research labs, quality-control sites and testing facilities. As of January 2010, there was a substantial increase in their inventory balances which tied up the capital necessary for further investment needed for expansion. The debt-to-capital ratio surpassed the target of 40% preventing the company to use their capital in other areas. In addition, the shipping costs were rising, competitive pressures were accelerating, and certain markets in North America and Europe were becoming saturated which underscored the necessity for capital investment
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3) Outsource warehousing to Global Logistics (GL) which will provide a centralized warehousing in Atlanta: Goods will be transported in bulk from Waltham to Atlanta and GL would take responsibility of inventory-control and delivery to the customers. This way SG would not have to bear the warehouse rental charges and could focus on increasing sales and develop newer products to meet customer needs.

Ava Beane should propose the following actions to Eric Gregory and Melissa Hayes:
1) Centralize warehousing in Waltham (option 1) to meet demand in Southeast and Northeast regions using delivery service of Winged Fleet as their rates are cheaper for these two regions (Exhibit 2).
2) Outsource warehousing to GL (option 3) to meet demand in the Central, Southwest and Northwest regions because shipping costs for those regions is cheapest with the GL rates (Exhibit 2).
3) Lower fill rates to the industry-average in order to decrease inventories.
4) Greater enforcement by managers to avoid keeping excess inventories in the warehouses.
5) Have periodic reviews of inventory and control procedures for all stocks in the warehouses.

Exhibit 1

External Funding Required in Year 2010
Expansion production and machines $ 10,000,000
Inventory for additional distributors $ 1,500,000
Operating expenses $ 88,800,000
Liabilities $ 6,700,000
Total $

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