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3 Aug 2018

When we think of inventory we think of retail operations.How does inventory management affect service businesses in hospitality, medical offices, personal service companies, schools, etc.

Pick one service business to discuss in detail?

Do you have any experience with inventory management as an employee or as a consumer?

Have you encountered any problems with inventory management as an employee or as a consumer?

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Patrina SchowalterLv2

6 Aug 2018

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Inventory management is the process of ordering, storing, and using a company's inventory; consisting of raw materials, components, and the finished product. Inventory management effects businesses all over in so many different ways. All these businesses must rely on having the products they need, when they need them, and never running out of them. Medical offices for example is one that can be discussed in great detail. Hospitals for example must always have inventory stacked up to deal with all sorts of issues. They must always have proper equipment, bandages, casts, medicine, proper tools to perform surgery, food for patients, the list goes on and on. Without having these things in their inventory, the hospital would suffer and would not be able to perform the way it needed to. This is one of the major examples because if medical offices/hospitals do not have what they need, it could be a matter of life or death in some cases. People have designated jobs at hospitals in order to run the inventory management and make sure there is never a lack of what is needed, and more is always on stand by in case of an emergency. They have plenty of room to store inventory, and use it whenever it is needed and then always prepare to purchase more. All these aspects from the people themselves, to the deliveries, to the use of the inventory, is all part of the inventory process. I have had very little experience with inventory management as an employee, but I have had to deal with it. At my internship at the Basketball Hall of Fame last year, I worked the annual enshrinement ceremony and had the responsibility of checking on all the inventory we had and make sure it was all in good condition, we had the proper amounts, etc. I had to go through numerous closets full of inventory to make sure everything was being handled correctly and that it was ready and in order to be shipped to the ceremony. The problem came in when some inventory was missing and there was not enough time to order more. Eventually it was found, but in situations like that you must always have extra on stand by and make sure that you give yourself plenty of time to restock if a dilemma arises. As a consumer you are a part of inventory management because as you purchase a company's product, they must prepare to replenish that inventory. The more of something you use/buy, the more they must replace and make sure they order the proper amounts in the future.

Question 1

In order to compete effectively in todayâs increasingly globalised market, many companies have used features related to environmental sustainability to âwinâ new customers.

In relation to the company you work in or one that you are familiar with,

(a) Explain the term âsustainable business strategyâ and how this strategy relates to operations and supply chain management.

(8 marks)

(b) Identify an operations and supply chain-related "disruption" that impacted the company. What could the company have done to minimise the impact of this type of disruption prior to it occurring?

(7 marks)

(c) You have recently been appointed as the production manager of the company. To meet the demands of its global market, the company has set up production locations in two different countries. One is located in the USA while the other is located in a Southeast Asian country. You want to find out what is the productivity of the current operations at the two production locations. You have obtained the following results from the production supervisor (Table 1).

Table 1

*FC â Foreign Currency where $1 = FC 10

	USA	Southeast Asia
Sales (units)	100,000	20,000
Labour (hours)	20,000	15,000
Raw materials (currency)	$20,00	*FC 20,000
Capital equipment (hours)	60,00	5,000

(i) Calculate the multifactor productivity figures for labour and capital together. Do the results make sense?

(5 marks)

(ii) Calculate raw material productivity figures (units/$) and explain any differences in these figures.

(5 marks)

Question 2

(a) A Japanese fast food restaurant, OiShi is concerned about its ability to provide quality service as they continue to grow and attract more customers. Its management has collected data from Friday and Saturday nights, its busiest times of the week. During these nights, about 75 customers arrive per hour for service. Given the number of tables and chairs, and the typical time it takes to serve a customer, the restaurant can serve on average about 100 customers per hour.

Analyse the restaurant service process in these nights where the data are collected and comment on whether the services are in the zone of service, the critical zone, or the zone of non-service? (Refer to Figure 2 when providing your answers)

Figure 2: Relationship between the Rate of Service Utilisation (r) and service quality

(4 marks)

The management anticipates that the restaurantâs demand will double in one year as long as it can provide good service to its customers. How much will the restaurant have to increase its service capacity to stay out of the critical zone?

(4 marks)

(b) Describe the characteristics of service processes of a typical fast food restaurant based on your service encounters.

(10 marks)

(c) Examine the strategies to manage service encounters. You should provide details on any TWO (2) possible customer-introduced variability in the service processes and propose THREE (3) accommodating strategies to effectively address these variabilities.

(7 marks)

Question 3

(a) Consider your organisation or one that you are familiar with that plays a role in the global supply chain network. This organisation can be a supplier, manufacturer, distributor, logistics service provider or retailer in a particular industry (e.g. fast-moving consumer goods, electronics, oil and gas, and pharmaceuticals). In your answer, you should relate the concepts and strategies in operations and supply chain management to the work environment.

Explain how the aggregate operations plan can help match supply with demand and optimise operational costs in this organisation.

(4 marks)

Provide TWO (2) strategies that can be used to influence demand and TWO (2) strategies that can be used to adjust capacity to match demand.

(8 marks)

(b) The development of web-based tools has allowed companies to collaborate on a larger scale and perform its operations and supply chain activities with greater ease. Demonstrate how collaborative techniques can be used to forecast demand. You should provide details such as the various stages of activities that are involved.

(8 marks)

Discuss the risks of being too reliant on the internet as a collaboration tool in demand forecasting and management.

(5 marks)

Question 4

Kee Wah Store sells a variety of exquisite European cookies and candies to the consumer market. The demand for cookies and candies is volatile and varies from month to month. The store orders from its suppliers. The lead time is normally one month, mainly consisting of the sea freight transportation time from Europe to Singapore. The store keeps a certain level of inventory at its warehouse.

The total demand for chocolate cookies is estimated to be 7,200 packets a year. The chocolate cookie packet is sourced from the supplier at $5 per packet and is sold to the end consumer at $15 per packet. It costs $100 to place an order to the supplier, and costs 20% of unit cost to store a packet of chocolate cookies for one year.

(a) Give FOUR (4) reasons why Kee Wah Store needs to maintain some inventory at its warehouse.

(8 marks)

(b) Examine the inventory situation for Kee Wah Store by applying the EOQ model to solve for order quantity and reorder point. What is the annual ordering cost, annual holding cost and total annual cost?

(10 marks)

(c) One supplier, Nee Ann Import Inc., approaches Kee Wah Store and proposes that it could shorten the lead time from one month to one week using airfreight.

What are the factors that Kee Wah Store needs to consider before deciding to accept or reject Nee Ann Importâs offer?

----- END OF PAPER -----

(7 marks)

jadeserval468

Bill Jobs has decided to start a computer company called CompU in Joplin. He knows that many MSSU students, who are now required to own and operate a personal computer, are having difficulty setting up their computers, accessing various materials from MSSUâs network and from the internet, and installing new programs as they become available. Billâs plan is to provide a service to the students by helping students set up their computers, show them how to access various databases, and offer an e-mail help desk for any problems that arise. Bill also wants to develop a website that will be a seamless portal to the internet and the campus intranet.

If things go well, Bill plans to sell computers with all the required software preinstalled to students, and develop the website that includes links to various businesses and services that students like, and to offer advertising services (and charge for the links) to local businesses. For example, a student could use the web site to order pizza delivery while studying for a financial management exam.

Once Bill has established CompU and developed the necessary operating procedures, he plans to expand to other colleges and universities in the area, and eventually go nationwide. At some point Bill plans to take CompU public with an IPO.

1. When Bill first begins CompU, if he is the only employee and only his money is invested in the company, would any agency problems exist? As he expands and hires additional people at CompU, might agency problems arise? When Bill first begins, what type of business organization will CompU be?

2. If Bill needs capital to buy his computer inventory to sell to students or develop software to run the website and the business, might this lead to agency problems? Would it matter if the new capital came in the form of an unsecured bank loan, a bank loan secured by the inventory, or from new stockholders (if Bill incorporates CompU)? What other sources of capital could Bill use?

3. Would potential agency problems increase or decrease if Bill expands operations to other campuses? Would the agency problems be affected by whether he expands by licensing franchisees or by direct expansion, where CompU actually owns the businesses on other campuses and operates them as divisions of CompU?

4. What action or actions can you think of that might minimize agency problems for CompU as Bill expands beyond MSSU? Would going public in an IPO increase or decrease agency problems?

5. If CompU is successful, what kind of compensation program could Bill use to minimize agency problems?

6. If Bill hires someone whom he can train to manage one of the new divisions he plans to open at other campuses, would it matter whether or not that person understood something about financial management? If two people were applying for a job that would lead to a managerial position, should Bill be interested primarily in the personâs technical skills or in a combination of technical skills and a vision of how different functions within CompU fit together?

7. CompU is successful, and the before-tax earnings for the first year are $90,000. Calculate the tax on these earnings using Table 2.1.