Concept explainers
Inventory Control at Wheeled Coach
Controlling inventory is one of Wheeled Coach’s toughest problems. Operating according to a strategy of mass customization and responsiveness, management knows that success is dependent on tight inventory control. Anything else results in an inability to deliver promptly, chaos on the assembly line, and a huge inventory investment. Wheeled Coach finds that almost 50% of the cost of every ambulance it manufactures is purchased materials. A large proportion of that 50% is in chassis (purchased from Ford), aluminum (from Reynolds Metal), and plywood used for flooring and cabinetry construction (from local suppliers). Wheeled Coach tracks these A inventory items quite carefully, maintaining tight security/control and ordering carefully so as to maximize quantity discounts while minimizing on-hand stock. Because of long lead times and
In a crowded ambulance industry in which it is the only giant, its 45 competitors don’t have the
Accurate bills of material (BOM) are a requirement if products are going to be built on time. Additionally, because of the custom nature of each vehicle, most orders are won only after a bidding process. Accurate BOMs are critical to cost estimation and the resulting bid. For these reasons, Collins was emphatic that Wheeled Coach maintain outstanding inventory control. The Global Company Profile featuring Wheeled Coach (which opens Chapter 14) provides further details about the ambulance inventory control and production process.
1. Explain how Wheeled Coach implements ABC analysis.
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- Instruction: Answer what is being required. You may compute them manually or use the Excel QM.Pencil number 2 at the campus book-store are sold at a fairly steady rate of $60 per week. It cost the bookstore $12 to initiate an order to its supplier and holding costs are $0.005 per pencil per year.Determine◦ How much is the Annual holding cost?◦ How much is the Annual ordering cost? ◦ What is the total annual inventory cost?If the order lead time is 4 months, determine the reorder point.Please Illustrate the inventory profile graphically.What additional cost would the book-store incur if it orders in batches of 1000?arrow_forwardHow does the Wilson approach optimize inventory management? Provide a detailed explanation.arrow_forwardDETERMINING INVENTORY MODELS FSYHILD is a manufacturing company of made to order face shield. It is producing products at a constant rate with a requirement of 5,500 face shields per quarter throughout the year. If ordering costs are P35.00 per order, unit cost is P10.00 per face shield, and annual inventory holding cost are charged at 30% of the units cost. A. What is the EOQ for this component? B. What is the expected time between orders? C. What are the total annual inventory and holding cost associated with your EOQ recommendation? D. Assuming a lead time of 5 days, what is the reorder point? E. What is the total cost if the management decides to increase the demand by 75%?arrow_forward
- Inventory Management Basic EOQ The Knight Company operates 365 days a year and uses 210 liners each day. Using a Continuous Inventory System, Knight orders 10,950 liners at a time. The orders are timed so that the new liners arrive just as inventory runs out (i.e. inventory level = 0). If = $1100, what is the total ordering cost for all orders in a year (Annual Ordering Cost)? Assume the delivery truck is unloaded instantly when it arrives. What is the maximum inventory level? What is the average inventory level? Hint: the company pulls liners from inventory at a constant rate.arrow_forwardControlling inventory is one of Wheeled Coach’s toughest problems. Operating according to a strategy of mass customization and responsiveness, management knows that success is dependent on tight inventory control. Anything else results in an inability to deliver promptly, chaos on the assembly line, and huge inventory investment. Wheeled Coach finds that almost 50% of the cost of every ambulance it manufactures is purchased materials. A large proportion of that 50% is in chassis (purchased from Ford), aluminum (from Reynolds Metal), and plywood used for flooring and cabinetry construction (from local suppliers). Wheeled Coach tracks these A inventory items quite carefully, maintaining tight security/control and ordering carefully so as to maximize quantity discounts while minimizing on-hand stock. Because of long lead times and scheduling needs at Reynolds, aluminum must actually be ordered as much as 8 months in advance. In a crowded ambulance industry in which it is the only giant,…arrow_forwardWhat is the ABC analyses! fundamental premise? What are the three measures involved in performing an ABC inventory analysis?arrow_forward
- Economic Order QuantityA pipe manufacturer requires a chemical for making plastic at the rate of 6000gallons per year. The cost of keeping the chemical storage is $10 per gallon peryear. Ordering costs are $200 per order. The chemical is bought at $45 pergallon.What is the EOQ and the Annual Total Cost?arrow_forwardEzrah is attempting to perform an inventory analysis on one of her most popular beauty products, the Heavenly perfume Annual demand for this product is 10,000 units with carrying costs of P50 per unit per year . ordering costs for her company typically run P100 per order Lead time averages 10 days (Assume 250 working days) What is the economic order quantity?arrow_forwardDiscuss how inventory expenses must be balanced and kept to q minimum through inventory controlarrow_forward
- Q.1. a) Explore the security concerns commonly associated with warehousing and inventory operationsarrow_forwardRicky Orange’s annual demand is 12,500 units. Ordering cost is $100 per order. Holding cost is estimated at 20% of product cost which is $50 per unit. What is the number of orders per year using EOQ to compute the best quantity to order?arrow_forwardDefine Inventory holding?arrow_forward
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