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    Great Western University currently maintains $240,000 of inventory for plumbing supplies from four local suppliers, with no formal inventory control system. The largest supplier, Automated Plumbing, offered to supply 15% below wholesale prices on a one-year contract, which would reduce inventory to $160,000. Six other firms offered 25% discounts but maintained average stock levels over 10%. The issues were high inventory levels, multiple suppliers, and the need for cost reduction. The director's strategic sourcing plan was to select a single supplier that could reduce inventory and costs the most. Based on calculations, Bumble Bee, offering inventory under $80,000 with no discounts but just-in-time delivery, was recommended as the best

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    Great Western University currently maintains $240,000 of inventory for plumbing supplies from four local suppliers, with no formal inventory control system. The largest supplier, Automated Plumbing, offered to supply 15% below wholesale prices on a one-year contract, which would reduce inventory to $160,000. Six other firms offered 25% discounts but maintained average stock levels over 10%. The issues were high inventory levels, multiple suppliers, and the need for cost reduction. The director's strategic sourcing plan was to select a single supplier that could reduce inventory and costs the most. Based on calculations, Bumble Bee, offering inventory under $80,000 with no discounts but just-in-time delivery, was recommended as the best

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    6 views6 pages

    Case Study 4 Presentation

    Uploaded by

    abulaas
    Great Western University currently maintains $240,000 of inventory for plumbing supplies from four local suppliers, with no formal inventory control system. The largest supplier, Automated Plumbing, offered to supply 15% below wholesale prices on a one-year contract, which would reduce inventory to $160,000. Six other firms offered 25% discounts but maintained average stock levels over 10%. The issues were high inventory levels, multiple suppliers, and the need for cost reduction. The director's strategic sourcing plan was to select a single supplier that could reduce inventory and costs the most. Based on calculations, Bumble Bee, offering inventory under $80,000 with no discounts but just-in-time delivery, was recommended as the best

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 6

    Case Study # 4

    GREAT WESTERN UNIVERSITY


    Presenters: Muhammad Shafi 54232 Abul Aas Abbasi 54233
    Instructor: Mazher Poonawala

    SCM overviews on Great Western University: Plumbing supplies includes pipes, tees, elbows and parts. Maintained approximately $240,000 inventory of plumbing supplies. Target to save the inventory costs: Lower purchase price Reduction in inventories Two large and six small plumbing supplies within geographical location. Bumble Bee with no formal inventory control systems denied to sale the plumbing supplies less than whole sale price.

    Automated Plumbing supplies, the largest plumbing suppliers with professional and trained staff offer Mr. Summerfield for sale of plumbing supplies 15 percent below the wholesale price with terms and conditions of a year contract. Reduction of inventory from $240,000 to $160,000 after contract of Automated Plumbing supplies. Personalized services by other six firms. Offered 25 percent discount below the whole sale price & having average stock Levels exceeding 10 percent.

    PROBLEMS & ISSUES: Inventory Management issue: have surplus inventory of 240,000 $, needs to reduce inventory

    Multiple Supplier: Great Western University Director wants to reduce supplier from 4 to 1.

    Cost Reduction: Considerable amount of cost of reduction is required by reducing inventories in the stock of Great Western University.

    Strategic sourcing plan : Director of Company have to do Strategic sourcing to accomplished the goal of low cost and less inventories. Discovery Evaluation Selection Development Management Director have 3 options 1) Inventory up to 80,000$ with no discount on wholesale rate . JIT 2 )Inventory up to 160,000 $ with discount average 15% below whole sale rate. Supply twice a week 3)25% discount and have minimum affect on inventory. Supply once a week.

    Have to calculate cost of inventory holding vs discount. Selection of supplier based upon cost of inventory holding vs discount.

    Recommendation : After calculating cost of inventory holding vs discount for all suppliers, it has been observed that the best option is Bumble Bee which will reduce the inventory and also inventory will be available JIT,

    Other options providing discount rate but inventory not reduced as much as compared to Bumble Bee proposal.

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