case study 3 en classe

case study 3 en classe - INVENTORY MANAGEMENT Firms like...

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INVENTORY MANAGEMENT Firms like Wheeled Coach spend over half of their sales revenue on purchases. These purchases are often in inventory and represent a huge portion of Wheeled Coach’s assets. But, perhaps even more importantly, the ambulances cannot be built if the proper inventory is not on hand when needed. Because of the cost and critical nature of inventory, Chapter 12 deals with inventory management. Two important inventory management techniques are ABC analysis and Cycle Counting. Wheeled Coach uses both. But effective inventory management begins at the design stage. Efficient inventory control requires knowing what is needed. Bills-of-material (BOM) provide this knowledge. Therefore Wheeled Coach spends substantial time and effort making sure the BOMs are correct. Only then does it know what to purchase and have available for the production process. ABC analysis helps firms develop policies and procedures for controlling inventory. ‘A’ items are the expensive items such as the chassis (usually purchased from Ford), aluminum (from Reynolds Metal), and plywood used for flooring and cabinetry (from local suppliers). These few items constitute the majority of the inventory values at Wheeled Coach. They are tightly controlled, from purchase to use, with effective security. Orders are negotiated to maximize quantity discounts while minimizing on-hand quantities. Some items, such as aluminum, must be ordered as much as eight months in advance. ‘B’ items are less expensive and controlled less tightly. Finally, ‘C’ items have
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This note was uploaded on 09/13/2011 for the course ADM 1300 taught by Professor Koppel during the Fall '08 term at University of Ottawa.

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case study 3 en classe - INVENTORY MANAGEMENT Firms like...

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