CONCLUSIONS AND OTHER RECOMMENDATIONS (25 points) Question No. 5.- If you concluded to suggest new buffer stock levels would these changes improve the company's cash flow position ? If so, by how much? Difference in Cash Position = Tip Compare initial Total inventory In Dollars with Total trventory In Dollars using suggested SS levels in > Question No. 6. What purchasing practice could you suggest changing, regardless of buffer stock levels, which could have an even greater impact on cash flow? Check the lot sine inventory enerated Explain: REPLENISHMENT & SAFETY STOCK STUDY CASE Consider the following scenario: The Supply Manager in a "widget" manufacturing company operating in a Make-To-Stock environment, decided to review its inventory position after a discussion with the company's Controller: who expressed that the company had way too much purchased material inventory and was negatively impacting the company's cash flow. The Supply Manager requested the Purchasing & Materials group to review the 3 highest dollar purchased items and verify their purchasing and inventory practices and if their safety stocks were properly set. Demand for these materials had been reasonably "stable" and was anticipated to continue that way. Purchasing placed orders for materials and components to suppliers to cover requirements on a weekly basis and the company operates in a 5-day week schedule. The Supply Manager's staff presented the following information High Runner Purchased Parts Price per Unit S 500 USD $ 25 USD $ 1800 USD Daily Requirements 3500 pcs 24000 pcs 1000 pcs Current Planned Safety Stock in 1000 pcs 60,000 pcs 1,000 pcs Pcs Current On-Hand Inventory in 1000 pcs 90,000 pcs Pcs Providing Vendor Delivery 85% of Orders 98% of Orders 90% of Orders Performance On-Time On-Time On-Time Average Vendor Order Recovery 13 1 1 when late in Days 3000 pcs Vendor Lead Time 10 working days 1 working days 5 working days CONCLUSIONS AND OTHER RECOMMENDATIONS (25 points) Question No. 5.- If you concluded to suggest new buffer stock levels would these changes improve the company's cash flow position ? If so, by how much? Difference in Cash Position = Tip Compare initial Total inventory In Dollars with Total trventory In Dollars using suggested SS levels in > Question No. 6. What purchasing practice could you suggest changing, regardless of buffer stock levels, which could have an even greater impact on cash flow? Check the lot sine inventory enerated Explain: REPLENISHMENT & SAFETY STOCK STUDY CASE Consider the following scenario: The Supply Manager in a "widget" manufacturing company operating in a Make-To-Stock environment, decided to review its inventory position after a discussion with the company's Controller: who expressed that the company had way too much purchased material inventory and was negatively impacting the company's cash flow. The Supply Manager requested the Purchasing & Materials group to review the 3 highest dollar purchased items and verify their purchasing and inventory practices and if their safety stocks were properly set. Demand for these materials had been reasonably "stable" and was anticipated to continue that way. Purchasing placed orders for materials and components to suppliers to cover requirements on a weekly basis and the company operates in a 5-day week schedule. The Supply Manager's staff presented the following information High Runner Purchased Parts Price per Unit S 500 USD $ 25 USD $ 1800 USD Daily Requirements 3500 pcs 24000 pcs 1000 pcs Current Planned Safety Stock in 1000 pcs 60,000 pcs 1,000 pcs Pcs Current On-Hand Inventory in 1000 pcs 90,000 pcs Pcs Providing Vendor Delivery 85% of Orders 98% of Orders 90% of Orders Performance On-Time On-Time On-Time Average Vendor Order Recovery 13 1 1 when late in Days 3000 pcs Vendor Lead Time 10 working days 1 working days 5 working days