Prepare your responses in Excel with each problem on a separate tab and show work for each problem step by step. Write a written explanation. INCLUDE THE formulas in calculations ( each number calculated within excel should have formula in it on the fx(formula bar)). ALSO WRITE IN WORDS HOW YOU GOT THE ANSWER BY SHOWING YOUR WORK
1. Place all answers, both numerical and written, in a single excel spreadsheet.
2. Place each problem into a separate tab or sheet in an Excel file.
3. Place labels on spreadsheet inputs and outputs, and use the yellow highlighter on the top menu bar to highlight your final answer.
4. If the question incorporates graphs, you must replicate the graph on your spreadsheet file.
5. Do not submit Word files or multiple files for a single assignment.
DO NOT FORGET TO WRITE A WRITTEN DESCRIPTION ON HOW YOU GOT THE ANSWER. STEP BY STEP FOR EACH EXCEL SHEET!!
Once you open the link, CICK ON THE GLOBE (ON THE BOTTOM RIGHT UNDER DOWNLOAD OPTIONS) ITS CALLED WEB VIEWER, CLICK ON PROCEED AND LOG IN WITH THE INFORMATION GIVEN BELOW.
• THE CREDENTIALS PROVIDED IS NOT TO ACCESS PERSONAL ACCOUNT, IT IS ONLY TO ACCESS THE TEXTBOOK THAT YOU NEED TO COMPLETE THE ASSIGNMENT. THEREFORE, YOU HAVE MY PERMISSION TO USE THE ACCESS OF THE CREDENTIALS TO LOG ON. I HAVE GIVEN YOU MY CONSENT PLEASE DO NOT EMAIL OR SEND ME SEVERAL MESSAGES OR CALL ABOUT MY CREDENTIALS. I AM GIVING YOU ACCESS AND YOU HAVE MY PERMISSION TO USE IT. THANKS
Username: OAdegunwa
Password: gcuOA0226
or you can use this login and password
username: GSingh1
password: Simarjit88
these log in actually work. You should have no problem accessing the information
Lecture Notes
THIS IS JUST A LECTURE NOTES TO GUIDE YOU ON WRITING THE ANSWERS
READ ALL of the writing BEFORE STARTING ASSIGNMENT
Introduction
Understanding an organization’s supply chain is a key competitive advantage and is directly related to the inventory that the organization may hold. Inventory is the “stock of any item or resource used in an organization” (Jacobs, Chase, & Aquilano, 2009, p. 547). Inventory serves key purposes in an organization. Understanding the various aspects of inventory cost can help the firm stay competitive. Various methods exist to effectively manage inventory, including the ABC approach and the economic order quantity (EOQ) model.
Supply Chain Management
There is a direct and strong relationship between supply chain management and financial performance across the spectrum of corporate America. Consequently, managers must understand the components of supply chain strategy in order to effectively manage inventory. Supply chain networks basically involve inputs that are transformed and localized before they become outputs. This system involves moving products and services from suppliers to customers in the most efficient manner possible. Specifically, Heizer and Render (2005) define supply chain management as the integration of processes that procure certain goods and services, transform them into intermediate goods and the final product, and get them to customers. A key paradigm shift has occurred in that competition no longer exists between companies, but rather competition exists between supply chains. Thus, as firms increasingly outsource their operations, a well-conceived supply chain strategy becomes more important.
Supply chain decisions affect strategy in a numbers of ways. For a firm operating under a low-cost strategy, suppliers will generally be selected primarily based on cost. Examples here include suppliers that provide commodity products such as sugar and flour. The firm will strive for minimal inventory costs and reduced supplier lead times in order to meet high-volume production requirements. On the other hand, for a firm operating under a differentiation strategy, suppliers may be involved in market research and product design. Examples here include products that require significant technical expertise, such as communications devices that provide data encryption functionality. Modular processes that support customization are an integral aspect of the supplier’s business model.
Purposes of Inventory
As discussed by Jacobs et al. (2009, p. 548), the purpose of inventory is as follows:
1) to maintain independence of operations;
2) to meet variation in product demand;
3) to allow flexibility in production scheduling;
4) to provide a safeguard for variation in raw-material delivery time; and
5) to take advantage of economic purchase-order size.
Ultimately, the goal of any inventory-management system is maintain as little inventory as possible while still meeting market demand for products and services.
Inventory Costs
In addition to the cost of the actual inventory item, there are four key cost categories associated with the management of inventory. These include the following (Jacobs et al., 2009, p. 549):
1) Holding or carrying costs: As the name implies, this cost represents the cost of keeping parts in stock. Example costs include storage, handling, and insurance.
2) Setup or production change costs: This includes costs related to changing production specifics of the products or services. Example costs include expenses related to specific equipment setups and obtaining required material for production.
3) Ordering costs: This includes costs related to order parts from suppliers. Examples include labor cost associated with placing orders and counting items as a prelude to placing the purchase order.
4) Shortage costs: This is sometimes referred to as a stockout cost. This cost occurs when actual demand exceeds available inventory, and often takes the form of backorder costs. In other words, the firm must order additional inventory from their suppliers, often at cost higher than usual, in order to expedite production quickly.
ABC Approach to Inventory Management
The ABC approach to classify materials considers both the value and consumer demand of the inventory.
• The parts classified as the most valuable represent the A parts, and generally represent the upper 70 percent−85 percent of the total value of all the parts. A parts that are small in size, e.g., high-end microprocessors or memory chips, are usually placed in a specially locked area in the warehouse. The inventory manager monitors the demand requirements of these parts closely, since, due to their individual high cost, they have high holding costs.
• The parts classified as the least valuable represent the C parts, and generally represent the lower 5 percent of the total value of all the parts. Examples include bolts, and rivets. These parts are usually placed in a less secure area. The inventory manager monitors the demand requirements of these parts, but not as closely as compared to the A parts, due to their low holding costs. At times, individual C-
• part items are not specifically inventoried.
• The B parts represent the moderate-value parts, approximately 15 percent-25 percent of the total value of all the parts. The inventory manager monitors the demand requirements of these parts more closely than the C parts, but with less scrutiny than the A parts, due to their moderate holding costs.
Note that the percent allocated to each category is industry or company specific. The ABC approach is practiced in most industries, especially those that have a wide range of inventory valuation.
Economic Order Quantity (EOQ) Model
A key dilemma faced by today’s manufacturers is how much material to order from a supplier. A traditional approach for calculating how much to order is based on the Economic Order Quantity (EOQ) Model.
Some key assumptions, as described by Heizer and Render (2005), are needed in order to apply the EQQ model. These include the following:
• Receipt of inventory is instantaneous for unpackaging parts, inspecting the material, and placing it into the warehouse.
• Demand is known, constant, and independent, and does not depend on any other factors, such as the demand of another part or product.
• Quantity discounts are not possible or do not exist for bulk purchases of parts.
