Case study- Carls computers

Case study- Carls computers

Question 1

From the above EOQ evaluation, it is evident that Carl computers will save $78.96 ($30,421.52-$30,500.48)

Cost of power supply:

Cost calculation using EOQ:

Using the EOQ model, the company will manage to save $996.15 ($219,844.41-$218,848.26)

Question 2

When price breaks are involved

When price breaks are not involved

When price breaks are involved, Carls computers will save $3,296.40 ($30,421.52-$27,125.12). Therefore, the company should consider using price breaks.

Question 3

Carls computers face many inventory problems. Many options can be evaluated to solve inventory problems. One way to resolve inventory problems is to re-evaluate their reordering approach. The company can make more savings using the economic order quantity approach, as shown in the above evaluations. For instance, the evaluations above show that the company should order more inventories to make money savings. Further, field service technicians should take out no stock without recording it in the inventory system. Essentially, this is so because this does not reflect a good inventory management practice (Song et al., 2020). Additionally, taking out inventory without entering it into the system contributes to inventory problems for the company.

Question 4

Rosa can get inventory under control by considering a plan that entails various aspects. First, Rosa should ensure that field supervisors are given the authority to issue stock. Second, the ERP systems should include authorized restrictions to ensure no part is taken out without being issued using the central inventory management system. Another aspect to consider in the comprehensive plan is the lead time and demand pattern. Essentially, these aspects influence the ordering activities undertaken by the company through the central inventory management system. The demand pattern and lead time should be determined both at the central level and at the field technician’s level. Notably, this will ensure that correct inventory planning is maintained and correct safety stocks are maintained.

 Reference

Song, J. S., van Houtum, G. J., & Van Mieghem, J. A. (2020). Capacity and inventory

Management: Review, trends, and projections. Manufacturing & Service Operations

            Management, 22(1), 36-46.

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Case study 12.1: Carl’s Computers (All 4 Questions)

*****PLEASE MAKE SURE TO SEE THE TEACHER’S INSTRUCTIONS AFTER EACH QUESTION.

Case study- Carls computers

Using the data on the two-part numbers given, provide a comprehensive evaluation of the ordering policies. Compare the present annual average cost with the cost of using a system such as EOQ & discuss and other order policies (as appropriate). 100-250 words (no citation)

Should Carl pursue the price break? Why or why not? 100-250 words (no citation)

What do you think are the sources of the problems? Be specific and show your analysis. 100-250 words (no citation)

Develop a comprehensive plan to help Rosa get the inventory back under control. 100-250 words (no citation)