Module 2 – Case
Case: The Excellent Manufacturing Company & Inventory
Note: Click the following link for information on the Excellent Manufacturing Company (EMC). You will find information on(A) EMC—Background Information; (B) Product Brochure; (C) Plasti-Brack Information; (D) Manufacturing Processes; (E) Basic Financial Information about EMC; (F) Organizational Chart; (G) Plant Layout
FROM: Gerald Garcia
SUBJECT: Inventory Project
I am looking over your productivity and process improvement plan. I can see that you put some effort into it.
I want to put in writing what we discussed the other day about inventory issues in the Plasti-Brack product line. I want you to do a thorough analysis of the inventory situation in the processes that generate these products. I want you to use your expertise and knowledge about inventory operations to determine a plan for improving the flow of the product, holding down inventories and costs, and making sure that we are accurate in our inventory records. Your analysis and plan will be used as a pilot and example for the other product managers to follow. So I am looking for an exemplary report with your plan, recommendations and justification.
Be sure to use the same report template that I provided in the first assignment.
Let me know if you have any questions as you proceed. Thanks.
Analyze the inventories that are used to produce the Plasti-Brack product line. Determine an appropriate plan for improving the inventory situation. Justify your plan. Write a report to the VP of Operations. Use the Report Template provided. Consult EMC Financial Info for COGS and the Notes about Inventory at EMC.
- Use the information provided in the Background readings. It is not necessary to do any additional research.
- Review the Notes at the Excellent Manufacturing Company and become familiar with the various inventories for the Plasti-Brack product line.
- Analyze the inventories including the raw material inventories, work-in-process, and finished goods. How could you apply the EOQ method? What are the implications of process set-up times?
- Determine and discuss other inventory issues that you think are occurring in the processes for the Plasti-Brack product line, i.e., direct and indirect (overhead) costs, inventory turns, inventory accuracy, and inventory storage and movement.
- Determine a plan for improving the inventory situation in the Plasti-Brack product line.
- Justify your plan based on the concepts of inventory management.
READ the information provided by the resources and references on the Background page. Understand the theory and concept of inventory, inventory turns, EOQ, and Lean.
Study the information about the Plasti-Brack product line and inventories. Understand the EOQ formula and how it can be used to reduce the shop order quantities. Calculate the current Inventory Turns. Estimate how much you can increase turns by using the EOQ. Determine other ways you can improve inventory management.
NOTE: If you use the references provided in the Background, then you do not need to include a References section. If you do decide to use additional references, then you need to cite them and include them in a References section.
The report should be 3–4 pages and submitted by the Module 2 due date.
Module 2 – Background
Averkamp, H. (n.d.). Introduction to Manufacturing Overhead, Accounting Coach, retrieved from http://www.accountingcoach.com/manufacturing-overhead/explanation
Industry Income-Expense Statement (n.d.). BizStats, retrieved from http://www.bizstats.com/corporation-industry-financials/manufacturing-31/show
Inventory, Part 1: http://www.youtube.com/watch?v=GIuFC2nc3tg
Inventory, Part 2: http://www.youtube.com/watch?v=ASIjL1tyINI
Inventory (2011). Retrieved from http://en.wikipedia.org/wiki/Inventory
Inventory and Lean Manufacturing (n.d.). Strategies, retrieved from http://www.strategosinc.com/inventory.htm
Inventory Management (n.d.). Reference for Business, retrieved from http://www.referenceforbusiness.com/management/Int-Loc/Inventory-Management.html
Inventory Turnover (n.d.). BusinessDictionary.com, retrieved from http://www.businessdictionary.com/definition/inventory-turnover.html
Lean Manufacturing Principles (n.d.). Strategies, retrieved from http://www.strategosinc.com/principles.htm
Lewis, J., Demand Media (n.d.). How to Determine Inventory’s Direct Labor Costs & Its Overhead Costs, Houston Chronicle, retrieved from http://smallbusiness.chron.com/determine-inventorys-direct-labor-costs-its-overhead-costs-37888.html
Economic Order Quantity (2011). Wikipedia, retrieved from http://en.wikipedia.org/wiki/Economic_order_quantity
McCreary, P. (2009). The Need for Lean Flow, American Machinist. Retrieved from http://www.americanmachinist.com/304/Issue/Article/False/84882/Issue
Piasecki, D. (n.d.). Optimizing Economic Order Quantity (EOQ), InventoryOps.com, retrieved from http://www.inventoryops.com/economic_order_quantity.htm
Singh, S.D. (2010). Low inventory angers John Deere customers, Business Week. New York: Apr 26, 2010. p. 29, retrieved from: http://www.businessweek.com/magazine/content/10_18/b4176029906771.htm?chan=magazine+channel_news+-+companies+%2B+industries
Wong, C. (n.d.). Using ABC Analysis for Inventory Control, APICS, retrieved from http://www.apics-redwood.org/articles/art0302BCW.htm
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