Group Assignment 2
Scientific Glass, Inc : Inventory Management
Group: Leonhard Fricke Paul Hannemann Ioannis Gounaris
Monday, 14th December 2015
The Scientific Glass, Inc (SG) is a midsized company in the specialized glassware industry producing for and supplying to research facilities and specialized laboratories in its market regions; North America, Europe, Asia Pacific and rest of the world. The company is facing an increase in inventory level balances with too much capital tied up in inventory preventing it from using its capital towards international expansion. Evaluating other options on the basis of effects of SG's previous attempts at …show more content…
IPL as calculated for Option 1 and 2 is the same combination for both products (795.4 for Griffin and 269.6 for Erlenmeyer) and also higher than the combination for Option 3 (126.5 and 46.8), with option 3 being closest to the baseline scenario as seen in Appendix II. Another important measurement instrument is the TAI which, again for Options 1 and 2 is at a high of 578.7 for Griffin and 204.4 for Erlenmeyer as opposed to Option 3 which is at a low of 99.4 and 38.6 respectively, again being much closer to the baseline levels ( Appendix II).
Finally based on all the calculations mentioned above the savings achieved using each option were computed, Options 1, 2 and 3 forecasted saving of 42%, 72% and 16% respectively. Therefore, if SG is to follow through with Option 2 and outsource operations to Global Logistics it will benefit from the highest amount of savings with respect to the baseline rendering this action plan most profitable in the long run.
Appendix I: Planned Investment and External Funding Calculations
Appendix II: Optimal Inventory Policy Level and
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This then translates to a 50% chance of not having inventory available during job opportunities. Therefore, opportunity costs might occur. The indifference of the production managers' in these aspects of inventory control is alarming and should be acted upon.
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