Case study- inventory manager

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 Randy Smith was very proud of his new position as inventory control
manager for the Johnson Trinket Company. His primary responsibility
had been fairly clearly defined: Maintain an inventory level in the
warehouse that ensures that production will not run out of stock,
yet also maintain an inventory level that will minimize inventory
holding and control costs. Since Randy had recently had a course
in materials management, he knew an approach that should help
him. He decided to make a list of inventory items in one small section
of the warehouse to see if he could develop a good plan for
inventory control. If it worked in the one small section, he could
expand it to the rest of the more than 30,000 part numbers in the
warehouse. The following is the data Randy compiled:
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 When Randy scanned the list, he noticed several things that

disturbed him, and he asked one of the experienced
inventory clerks. The following list summarizes the part
number issues that concerned Randy, and the explanation
from the clerk:
 Part number 1236, a very expensive part with almost half-a-
year’s worth of inventory. This part is used for a product that has
very cyclical demand, and the busy time of the year is about to
start.
 Part number 1241 is very inexpensive, yet the inventory is very
small. This part has a supplier with an erratic delivery history, and
the part also has a very long lead time. A lot of 150 has been on
order for some time, and is now several days past due.
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 Part number 1242, like 1236, is expensive with almost half a year
worth of inventory—this part is shipped to a location on the other side
of the country and is being accumulated into a large lot to save shipping
costs.
 Part number 1246 is not too expensive, with a low inventory. This part
is produced in- house, and has a quality tolerance that the older
equipment, which was used to produce it, had a difficult time meeting.
The last batch was rejected by the quality department.
 Part number 1253 is moderately expensive with a large inventory
compared to usage. This part was subject to a recent quality audit, and
almost 150 of the items were rejected as a result of that audit.
 Once Randy understood some of the issues, suddenly he did not feel quite
as confident that he had the best approach in mind to control the inventory
to meet the expectations of his boss.