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Excellent Manufacturing Company Inventory Management

Read the information provided by the resources and references on the Background page. Understand the theory and concept of inventory, inventory turns, EOQ, and Lean. Please refer to the attached document for more information.

Study the information about the Plasti-Brack product line and inventories. Understand the EOQ formula and how it can be used to reduce the shop order quantities. Calculate the current Inventory Turns. Estimate how much you can increase turns by using the EOQ. Determine other ways you can improve inventory management.

Use the information provided in the Background readings. It is not necessary to do any additional research. Review the your Notes about inventory at the Excellent Manufacturing Company and become familiar with the various inventories for the Plasti-brack product line. Analyze the inventories including the raw material inventories, work-in-process, and finished goods. How could you apply the EOQ method? What are the implications of process set-up times? Determine and discuss other inventory issues that you think are occurring in the processes for the Plasti-brack product line, i.e. costs, inventory turns, inventory accuracy, and inventory storage and movement. Determine a plan for improving the inventory situation in the Plasti-brack product line. justify your plan based on the concepts of inventory management.

Fill out the following report:


Review: This section discusses the reason for the report - why your boss assigned you this project. It also provides discussion and description of the current situation. What is the problem, what are the data and information about the state of affairs, the situation, etc. in the Plasti-brack processes and areas of concern.

Goals and Objectives: This section provides the goals and objectives that you want to accomplish for this project. Goals are the more general and qualitative items you want to achieve, and objectives are more specific and quantitative.

Actions/Plans: What do you propose to do to accomplish the goals? These should be specific and detailed and focused on the areas of concern in the Plasti-brack processes and areas of concern. A plan should include some sequence of actions, steps, etc., and if possible, who should do them. What are the costs involved in doing these actions?

Explanation/Justification: Explain how the plan will accomplish the goals and objectives. Clearly identify the connection between the plan, the various actions and the various goals and objectives. What are the benefits of achieving the goals, and do these benefits justify the costs of doing them?


Solution Preview

To: George Washburn
From: XYZ
Subject: Inventory situation at EMC

Review of the Current Situation:
Accounting for inventory is not on a product basis. However ,each product line uses its proportionate share of inventories based on costs. Inventories for plasti-brack product line include plastic resin, plastic parts, plain brackets and assembled Plasti-brack items. The inventory position of Construction Hardware (Plasti-brack is about 85% of this group) shows that the beginning inventory was $295,200 while ending inventory was $271,000. Of this total inventory, purchased parts constitute the largest percentage of inventory. The beginning position of purchased parts is $116,700 and ending position is at $99,000. This indicates that only $17,700 worth of purchased parts are actually used in the manufacturing process for Plasti-brack. By not having proper inventory accounting process in place, inventory costs are too high for EMC.

Goals and Objectives:
The main goal for EMC is to have inventory control. It implies that there should be an inventory management system which keeps track of inventory by product line.
Objectives of inventory management program should be to:
Minimize total inventory costs.
Manage quantity of items and time when they should be ordered

Inventory management can be a very important step for EMC ...

Solution Summary

The response provides a review of inventory situation at Excellent Manufacturing Company and outlines inventory management plan to improve the existing situation