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Production and operations management
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Production and operations management


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Production and operations management and its detailed analysis on various factors

Production and operations management and its detailed analysis on various factors

Published in: Business, Economy & Finance

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  • 1. Submitted by: Ranjeet Kumar Singh(11BM60068)
  • 2. Issues  Increasing trends in the balance of Inventory level  Tied up money in the inventory, leads to lack of expansion  Increase of debt to capital ratio more than 40% created lack of funding expansion to international market  Extra cost on the inventory creates an obstacles in the growth of the company.
  • 3. Analysis of the Issues  Company’s fill rate 0f 99% against market fill rate of 92%  Excess inventory than necessary  Exceeding the upper limit of the day’s of supply(60 days)  Increased transshipment cost  Increase of inventory level leads to increase of debt to capital ratio
  • 4. Alternative options for Issues  Number of warehouses and their structures can be changed --- Continuing with 8 warehouses --- One central warehouses --- Two centralized warehouses --- Outsourcing the warehousing functions  Related policies can be changed --- Periodic Audit --- Increasing reporting activity levels --- Stopping trunk stock activities --- Different policies at different warehouses.
  • 5. Evaluation of Alternative Options   Transportation Cost: Calculated for Griffin Erlenmeyer, demand for next year at 20% increase in sales. Option1: 8 warehouses and making no changes Option2: 1 warehouse and shipments are calculated for the rates of Winged fleet Option3: 2 centralized warehouses, Waltham and Phoenix will equally supply east and west region respectively Option4: Warehousing functions are outsourced, assuming all the 5 regions of Global Logistics have equal demand Cost(in $) related to each options are: Fill rate: Optimum fill rates for alternatives:
  • 6. ……contd.  Average Inventory level: Weighted average biweekly levels are:  Time Responsiveness: working with GL has the advantage of differentiating customer/orders  Additional Costs and Benefits: Investment shared equally among all the warehouses, Operating costs will be compared with the inventory level directly , Constant cost of sales force
  • 7. Conclusion  Company should choose the alternatives and compare the results accordingly.  Inventory level and transportation cost are areas of conflicts  Get the most cost effective option to get target debt capital ratio.  Maintaining and improving higher customer satisfaction level.
  • 8. Thank you