Answered: . Why is accurate inventory such an…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

1. Why is accurate inventory such an important issue at Wheeled Coach?

2. Why does Wheeled Coach have excess inventory, and what kind of a plan would you suggest for dealing with it?

3. Be specific in your suggestions for reducing inventory and how to implement them. *You may wish to view the video that accompanies this case before

Transcribed Image Text:Wheeled Coach, the world's largest manufacturer of ambulances, builds thousands of different and constantly changing configu- rations of its products. The custom nature of its business means lots of options and special designs-and a potential scheduling and inventory nightmare. Wheeled Coach addressed such prob- lems, and succeeded in solving a lot of them, with an MRP system (described in the Global Company Profile that opens this chap- ter). As with most MRP installations, however, solving one set of problems uncovers a new set. One of the new issues that had to be addressed by plant manager Lynn Whalen was newly discovered excess inventory. Managers dis- covered a substantial amount of inventory that was not called for in any finished products. Excess inventory was evident because of the increased level of inventory accuracy required by the MRP system. The other reason was a new series of inventory reports generated by the MRP system installed by Wheeled Coach. One of those reports indicates where items are used and is known as the "Where Used" of all three was increased. Additionally, the increased accuracy of the bills of material had the added advantage of reducing the number of engineering change notices (ECNS). Similarly, purchase-order accuracy, with regard to both part numbers and quantities ordered, was improved, reducing costs and ultimately improving quality and performance to schedule. Eventually, Lynn Whalen concluded that the residual amounts of excess inventory were the result, at least in part, of rapid changes in ambulance design and technology. Another source was cus- tomer changes made after specifications had been determined and materials ordered. This latter excess occurs because, even though Wheeled Coach's own throughput time is only 17 days, many of the items that it purchases require much longer lead times. Discussion Questions* report. Interestingly, many inventory items were not called out on bills of material for any current products. In some cases, the reason some parts were in the stockroom remained a mystery. The discovery of this excess inventory led to renewed efforts to ensure that the bills of material, as well as the receiving reports and inventory, were accurate. With substantial work, the accuracy 1. Why is accurate inventory such an important issue at Wheeled Coach? 2. Why does Wheeled Coach have excess inventory, and what kind of a plan would you suggest for dealing with it? 3. Be specific in your suggestions for reducing inventory and how to implement them. *You may wish to view the video that accompanies this case before answering the questions.

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