Processes and Supply Chains Case Study

In the case study, she seeks to eliminate the bloated inventories and also improve the service offered to the customers. There is seen the frequency in the back orders which have excessive lost sales. Inventories reported are seen to be much advanced than anticipated while the new capacity was built and even the sales are not seen to increase. Summary of the data regarding statistics of inventory for example inventory turns is not available. As a way of uncovering the nature of the problem, two products are being analyzed which are the DB032 drive belt and the EG151 exhaust gasket. As a way of preventing issues arising from shortages, Parts Emporium develops a need to raise the lot size towards EG151 to around 339 units to congregate the EOQ.

It is good strategies which will assist the corporation to decrease on its yearly cost of record from $845. 95 to around $329. 27 thereby producing a discount of 61% which is equivalent to $516. Also through taking the recommended actions, Parts Emporium will be in a position o save a total annual ordering cost ranging from $707. It, therefore, explains that much inventory in this company is an indicator that there are serious and costly business problems in the company. Some of the problems which can arise from bloated inventory include inadequate forecasting, insufficient product specifications, low quality products, long lead times, bottlenecks, and also inappropriate performance metrics. The recommendations which the company needs to embrace to reduce inventory is to align inventory control. Heavy inventories have been seen to cause huge cash vacuum and therefore calls for the need to be reduced and find the free cash for investment.

Lack of inventory control can lead to excessive inventory and hence unending problems in the company. The issue with the back orders is seen to arise due to lack of safety in the stock. Due to lack of safety, it leads to the problem of stock out in the company. Through appropriate management of the lot size which appears to be one of the recommendations, safety stock will be adequate and therefore prevent the problem of stock out in the company. Strategies to advance the company's inventory routine, decrease variability, and advance customer service. As a recommendation to Parts Emporium, twofold can be a recommendation. With a reduced cycle time, the company will have improvised prediction when it comes to improved production and in the long run, improve the customer service with better quality products.