Steel Works, Inc.

Inventory Method: The inventory amount for the year ended 12/31/2016 is $14,760,000,000 which is an $759,000,000 increase from the previous year. CVS uses the lesser of the weighted average cost or market value when determining the value of inventory. Inventory is verified for accuracy by regularly doing physical counts in all locations. Between physical counts, CVS uses sales results from previous years to accrue the estimated physical loss. These estimates are determined for each individual store and warehouse separately to ensure the most accurate information possible is reported. CVS has decided to use a new method available after annual periods beginning after 12/15/2016 known as the lower of cost and net realizable value to replace using

Owens & Minor is a distributor of surgical and medical supplies to hospitals and other health care facilities. Due to changing demand from customers, the company is facing increased operating costs, which has resulted in lower profit margins and even losses. In 1993, O&M recorded an $18 million profit, which was reduced to a loss of $11 million in 1995. The entire industry is experiencing similar difficulties. In an effort to resume profitability, O&M is evaluating alternatives to “cost-plus pricing”. Cost-plus pricing does not reflect the true cost of the services provided by O&M. Customers are demanding more of O&M while

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.

We began our analysis by searching for bottlenecks that existed in the current system. It was easily identified that major issues existed in the ordering process. Without calculations, you could tell the reorder point was too low since the historical plots showed inventory levels at zero for two or more days at a time. The number of jobs in customer orders showed correlating spikes at the same time of the inventory outages. We reviewed the utilization and queues of the other stations in the system but were hesitant to make in immediate changes since we were not entirely certain the effects of correcting the inventory policy.

Since production goes on for 8 hrs per day, manufacturing lead time = 5880 / (8 * 60)

(i.e. products that they get to order only once because of long supplier lead times). First they determine a forecast for an item and then they have a process for converting that forecast into an order quantity.

In the Fixed-Order Quantity Model (Q-Model), every time that the stocks reach a specific level an order is placed. Q-Model requests a constant monitoring in inventory levels. The risk of stock out only occurs during the lead time, thus the safety stock is less than in P-Model for the same service level. Reorders are placed when stocks reach (R), and the safety stock that must be reordered is:

During the game, I realized that wide gaps in orders of every role in the supply chain such as factory, distributor and retailer create inventory management challenges. For example, distributor records 0units between week1-week 4 compared to retailer within the same period. The retailer records 3units, 5units, 2units and 2units between weeks 1- week 4. The same applies to factory with 0units from weeks 2-4. Addressing inventory management problems requires developing an average unit level to avoid disappointing customers when demand

The options available for this company involve looking at different inventory models in order to allow this specialist the ability to produce outside high demand windows of opportunity. Initially this company began using the MRP system which enevitably helped to reduce the company’s inventory and at the same time improved their on-time delivery numbers. Currently the process has allowed the Space Age company to maintain a cost of $1.25 per week to store their Gemnini and $1.50 per week to store each of their Saturns that sat in inventory.

This haevily disguised case is set in the “nature “woodstoves business in 1986. It is not based on The Vermont Castings Company. The issue is product line strategy based on product line profitability.

With this company the inventory management ratios further indicate that there may be an issue with inventory and inventory controls. The inventory turnover ratio is lower than the industry average and the days’ sales in inventory are high. A company wants to turn inventory quickly to reduce storage costs, and

Lead time varies significantly, which affects the inventory cycle. The plant has to set a safety stock that will protect the production against stock outs, vehicle breakdowns, weather related delays and the shortage of supply from farmers and hogs barns.

To minimize total waiting time and stockpile re-handling costs (Keep operations costs as low as possible).

Q1. Based on the 2004 statement of profit and loss data, do you agree with Water’s decision to keep product 103?

A common way of decreasing the amount of inventory a business holds on a daily basis is implementing a just-in-time inventory process. A Just-In-Time inventory system means that the business gets the materials for a product, as they are demanded. “The electronic data