Christina has been a car enthusiastic since she was a teenager. This passion led her to open an automotive supply store. Her primary customers are small car repair shops. Many of these shops service a variety of makes and models. The other customer base is car buffs such as herself. These customers are car hobbyists, and they own "classic" cars. They often buy an older clunker and rebuild it. They prefer to rebuild it as much as they can to the original specifications. Consequently, finding parts for these older makes or models is a challenge and building an inventory is even more difficult.
Because Christina is such an old car enthusiast, she has often scoured the Internet, junk yards, and other places for usable old car parts. Christina has a section of her warehouse set aside for "classic" car parts, from starters, to hub caps, to door handles, etc. There is no real competitor in this segment of her business. 

While a few places may have the odd part or two for older models. Christina has a significant inventory for most makes and models going back to the 1940s. Because of the generations of the customers she is serving, the newest make/model is from the early 1970s.
The remainder of Christina's Automotive Supplies' inventory is for more recent makes and models, those built within the last ten years. This section of the inventory is much larger than the one for the "classic" cars; however, despite its size, its dollar value is not much higher. One challenge Christina has is warehouse space. Inventory capacity is related to space. Therefore, to serve both customer segments as best she can, Christina must maximize her warehouse space.

Although Christina is aware of what inventory she has on hand, she has never actually used a specific inventory system. Now that her warehouse is reaching capacity, Christina realizes she must have a better inventory management process. Adding more warehouse space is not an option. She must use the space she has more efficiently. Christina begins to ponder how she can do it without creating a potential inventory shortage for either customer segment.

 

1. Since the parts for the "classic" cars are difficult to obtain, Christina has decided that she must set aside a certain percentage of the warehouse for these parts. When she locates a specific part for this customer segment, Christina must buy it and place it in her inventory because once the opportunity passes, it may never return. How does this affect the inventory management of the parts for newer cars? What systems or processes do you recommend to Christina to ensure she does not develop shortages for the parts for the car repair shops? Explain how your recommendation helps Christina.
 

2. Considering Christina's situation and her two distinct customer bases, do you think the ABC classification system would benefit her? If so or if not, explain why.
 

3. Explain whether the EOQ or statistical reorder point methods can enable Christina to better manage her "classic" car parts inventory.

Answer rating: 100% (QA)

1 Christinas decision to set aside a certain percentage of her warehouse for classic car parts can affect the inventory management of parts for newer cars The challenge is to balance the allocation of ... View the full answer