This case describes a conversation between Joe Melaney, the owner of the Toro distributorship in Galveston, Texas, and his son, Joe Jr. The immediate subject of the conversation is to decide on the spring season order for the entire irrigation line. In the course of the conversation, other issues emerge, ranging from the proper inventory level for specific parts to the future ownership of the distributorship.

This case can be used at two levels. At the first level, the case is an exercise in the development of an effective system for managing independent demand inventory, taking into account the particular problems faced by a distributorship. At the second level, the case can be used to demonstrate the importance of inventory management as a policy variable. Since Southern Toro is a distributorship, profitability depends heavily on inventory management.

1. What would you recommend that Joe Jr. do, assuming he takes control of Southern Toro?

2. Evaluate the importance of inventory and inventory management of the Southern Toro distributorship for both irrigation products and spare parts. Should the inventory be cut back?

3. Evaluate the current inventory management system at Southern Toro. What inventory management system would you recommend?