Introduction Company FR is a full-time service restaurant offering variety of foods for breakfast, lunch and dinner. At present, Person KD is the general manager of the store and has an issue with managing the inventory and ordering items. Each time Person KD makes an order, there is an error (either the items are in shortage or in surplus, which incurs excess cost). The shortage of items led to unhappy customers and the customer count started to decrease. Company FR uses online inventory system, where a system is used to compute the inventory, the data of current inventory at the end of period, sales for the current week, and then the system makes the comparison. This is important to the company, since it accounts to 30% of the total cost. The company sets standards to have 29% to 36% of inventory level. At company FR, Person KR makes an order based on her intuitive assumption, since she is not fully aware of inventory management. Therefore, Person KR seeks helps from one of her employees to assist with managing inventory. To determine: The reasons to consider while dealing with nearby supplier and reasons for not switching suppliers.

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Chapter 12, Problem 3.5CQ

Summary Introduction

Introduction

Company FR is a full-time service restaurant offering variety of foods for breakfast, lunch and dinner. At present, Person KD is the general manager of the store and has an issue with managing the inventory and ordering items. Each time Person KD makes an order, there is an error (either the items are in shortage or in surplus, which incurs excess cost).

The shortage of items led to unhappy customers and the customer count started to decrease. Company FR uses online inventory system, where a system is used to compute the inventory, the data of current inventory at the end of period, sales for the current week, and then the system makes the comparison. This is important to the company, since it accounts to 30% of the total cost. The company sets standards to have 29% to 36% of inventory level.

At company FR, Person KR makes an order based on her intuitive assumption, since she is not fully aware of inventory management. Therefore, Person KR seeks helps from one of her employees to assist with managing inventory.

To determine: The reasons to consider while dealing with nearby supplier and reasons for not switching suppliers.

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