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    Smitheford Pharmaceuticals

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    I attached the picture of what each rock is.

    Smitheford Pharmaceuticals wants to reduce its inventory costs. As a quality manager to Smitheford Pharmaceuticals, explain the meaning of lowering the water level to expose the rocks, on the diagram on this figure, as you would to your management team. How would you keep Smitheford Pharmaceuticals from immediately raising the inventory as soon as an outage occurs? Explain how each rock can cause problems in the production process and how you would help vPharmaceuticals to improve processes and reduce inventory.


    Gaither, N., & Frazier, G. (2002). Operations management (9th ed.). Mason, OH: South-Western.

    -Explain the concepts of forecasting, system design, capacity planning, quality management and control, supply chain management, inventory management and scheduling, and project management and how they each relate to form an integrated view of production and operations.
    -Analyze processes and workflow of quality management, JIT and lean manufacturing, inventory management, and supply chain management and the use of enterprise resource, manufacturing and production operations systems and platforms.

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    Solution Preview

    Step 1
    I will keep Smitheford Pharmaceuticals from immediately increasing the inventory by carrying out outage planning, weekly forecasting, and outage analysis for the multichannel business. I will prevent Smitheford Pharmaceuticals from increasing the stock by explaining to them the connection Smitheford Pharmaceuticals has with vendors, so that I can get the deliveries in a shorter period of time. I will keep ready a vendor scorecard, keep in touch with vendors, and negotiate terms with vendors that will help keep the inventory level low.
    I will prevent Smitheford Pharmaceuticals from increasing the inventory after an outage by keeping a base cycle stock that is economic, base stock on forecasts of customer demand, and making accurate routine demand forecasts. The past accuracy of the forecasts will create credibility for the forecasts made now. I will reduce the buying lead time so that a higher inventory need not be maintained. If there are multiple purchases from the same suppliers, I will reduce transaction cost, reduce cycle stock and purchase transaction costs. To minimize the inventory at Smitheford Pharmaceuticals, I will get downstream forecasts and will send these forecasts upstream so that there are no delays in production.
    Collaborating with supply chain partners will help me reduce inventory. If Smitheford Pharmaceuticals has multiple locations, ...

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