1. What specific action should the company take in the area of inventorycontrol? Support your proposal with an analysis of its strengths andweaknesses. (5 marks)The company should introduce schedule planning and material requirements planning toproperly manage the inventory in line with production requirements. There is notable lack ofproduction planning and scheduling observed from the case. Proper inventory managementshould also be applied where records of stock in hand are captured thus allow provision of aclearer view of products required as well as stock in hand. There are currently no formalinventory records captured. The use of the make and buy sheet lacks sufficient details forefficient decision making.Having an inventory management system helps companies avoid production overruns andinaccurate material requirements and stock control, which may be costly in the long run.Strengths of having an inventory management process include efficient production resultingfrom accurate production planning of raw materials and quantities required. It also helps inplanning production timelines accordingly and in line with sales requirements. Thechallenges associated with such a system include the complexity of managing inputs toefficiently calculate requirements planning. It can also be a costly to implement and requiresskilled resources with the necessary technical information and clear processes. As with anysystem, if the inputs are not accurate, the resulting plans will be distorted. 2. What is your reaction to the argument of those who oppose tightercontrols? (5 marks)The effective inventory management process includes effectively managing inventory onhand for efficient production. The cost of buying an producing in small quantities resulted indelays and loss of sales. This is sufficient ground to warrant changes in the operatingprocedures. Having tighter controls will help preventing production overruns and also assistin managing stock in hand. The cost of storing the materials required outweighs theproduction losses encountered. Formal record keeping will allow quality estimates to bedrawn for efficient order planning. The potential savings cannot be properly evaluated due tothe lack of records available from the system. With the number of products produced in thecompany, an investment in an inventory management system will be beneficial and will yieldreturns that outweigh the initial investment made in the system.
3. How would your recommendation in answering question 1 differ if this