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Case2 Solution

system used at blanchard advantages1 at blanchard

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Unformatted text preview: e than 50% of the reserved space) hence carrying cost is fixed (i.e. security, heating, cooling etc.) regardless of the volume of the finished goods inventory. Hence Blanchard importing & distributing co. can focus on reduction of other costs. 2) The substantial cost incurred at Blanchard is that of setting up cost in which the size changeover takes one complete day. Hence it is necessary to reduce this time by reducing the size changeover. Bob and Hank are exactly doing the same. 3) Bob and Hank are not following the EOQ/ ROP set as per 1969 as it is now obsolete, the basis on which these values were based was with the certain pattern of demand for items as per 1969 data. Also it did not account for the pattern of production (i.e. all items of same size in one batch). Usage of latest data for predicting demand and accounting for the pattern of production ensures that the setting up costs are low and service level is high. Disadvantages1) Due to the patter of production of batch wise production based on size as well as to maintain high level of service a higher level of finished goods...
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