Company FL had rapid growth since 1931 after the purchase of company SA for $100. The company has 41 products. With 48,000 workers, production is done in 36 product-focused plants. Inventory is a major concern where the holding cost exceeds 25% of product value but in the food industry, the level exceeds due to the perishable nature of raw materials. The main ingredient of the firm is cornmeal, corn, potatoes, oil, and seasoning. Frequent delivery of main ingredients follows, The potato storage area will hold 7 1 2 hours’ worth of potatoes which are delivered in 10 truckloads with 150,000 lbs. consumed in one shift. Oil inventory lasts for 4 1 2 days which arrives by rail car. Cornmeal inventory averages for 4 days which arrives from various farms in the Midwest. Seasonal inventory averages for about 7 days. Packaging inventory averages 8 to 10 days. The company product represents major capital investment which must attain high usage to be effective. Due to high usage consistent equipment and tight scheduling is needed. Reliable machinery requires inventory such as MRO, maintenance, repair, and operating supplies. Non-MRO inventory moves rapidly. Within 1 1 2 shifts, the raw materials become work in process as they move through the system. In less than 1.4 days the packed finished products are sent for distribution. To determine: The major inventory items in Company FL and the way they rapidly move throughout the process.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 1.2VC

Summary Introduction

Case summary:

Company FL had rapid growth since 1931 after the purchase of company SA for $100. The company has 41 products. With 48,000 workers, production is done in 36 product-focused plants.

Inventory is a major concern where the holding cost exceeds 25% of product value but in the food industry, the level exceeds due to the perishable nature of raw materials. The main ingredient of the firm is cornmeal, corn, potatoes, oil, and seasoning. Frequent delivery of main ingredients follows,

The potato storage area will hold 712 hours’ worth of potatoes which are delivered in 10 truckloads with 150,000 lbs. consumed in one shift.

Oil inventory lasts for 412 days which arrives by rail car.

Cornmeal inventory averages for 4 days which arrives from various farms in the Midwest.

Seasonal inventory averages for about 7 days.

Packaging inventory averages 8 to 10 days.

The company product represents major capital investment which must attain high usage to be effective. Due to high usage consistent equipment and tight scheduling is needed. Reliable machinery requires inventory such as MRO, maintenance, repair, and operating supplies.

Non-MRO inventory moves rapidly. Within 112 shifts, the raw materials become work in process as they move through the system. In less than 1.4 days the packed finished products are sent for distribution.

To determine: The major inventory items in Company FL and the way they rapidly move throughout the process.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Define Inventory holding?

L. Houts Plastics is a large manufacturer of injection-molded plastics in North Carolina. An investigation of the company's manufacturing facility in Charlotte yields the information presented in the table below. How would the plant classify these items according to an ABC classification system? (Round dollar volume to the nearest whole number and percentage of dollar volume to two decimal places.) L. Houts Plastics Charlotte Inventory Levels Item Code Avg. Inventory (units) Value ($/unit) Dollar Volume % of Dollar Volume 1289 380 3.50 insert answer insert answer 2347 300 4.00 1,200 37.83 2349 120 2.50 300 9.46 2363 75 1.30 insert answer insert answer 2394 60 1.75 105 3.31 2395 25 2.00 insert…

Give 3 examples of inventory risk.