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a. Identify some costs savings Supervalu might realize by reducing the number of items it carries in inventory by 25 percent. Be as specific as possible and use your imagination. By reducing inventory by 25%, Supervalu might realize cost savings in employee time spent conducting transactions, picking, packaging, and handling inventory. This will also decrease the space required to store inventory both from eliminating a product line and streamlining packaging. This could allow space for another product line or reduce overhead costs if a section of the warehouse utilities can be turned off. The company may realize a cost savings with vendor pricing and may receive a bulk discount when ordering the same size/type of packaging. The cost…show more content…
Working together and empowering employees to help make decisions can improve employee moral, increase ownership, and increase production. Some examples of improvements can be streamlining production lines and conducting proper preventative and predictive maintenance on equipment to reduce down time. Increased safety awareness and wellness programs improve employee safety and health resulting in fewer loss workdays due to injuries and illness. Energy savings and waste minimization programs can be implemented to decrease spending on utilities and waste hauling. Excess packaging can be reduced and product packages can be reconfigured to save costs on materials, storage, and shipping. 2. How do managers go about making segment or product line elimination decisions? Managers must first determine what information is relevant when deciding to eliminate a segment or product line. Information that is relevant for decision making needs to differ among the alternatives and be future oriented (Edmonds, Olds, & Tsay, 2011). “Segment related unit-level, batch-level, product-level, and facility-level costs that can be avoided are relevant. If the segment’s avoidable costs exceed its differential revenues, it should be eliminated, assuming favorable qualitative factors” (Edmonds, Olds, & Tsay, 2011, p. 268). Edmonds, Olds, & Tsay (2011) offer a three-step quantitative analysis for segment or product line elimination: Step 1: Determine the amount

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