7. Calculate the EOQ and ROP using the corrected cost values. Compare them with the currently used values.
Barilla Case Study Term Project Part 2
Q1. What problem was JITD trying to solve?
Ans1. The JITD program was trying to meet the extreme variation in demand with which was straining Barilla’s manufacturing and logistics operations. For example, some of the products required extreme heat and when the demand would suddenly increase, the production could not keep up with the demand. On the other hand holding large quantities of goods to meet the distributers’ requirements was resulting in very high inventory cost. Some manufacturing personals wanted distributers and retailers to carry more inventories to control the fluctuations in their orders while some thought that the distributers and retailers were already carrying too many goods. Brando Vitali, the director of logistics though that there should be an alternative approach to fulfill the order requirements. He thought that both the distributors and retailers are suffering from thinning margins; hence we should find a way to take costs out of our distributing channel without compromising the service. He thought that they could improve the operations both for themselves and their customers just by determining the right quantity of goods and delivery schedules. He came up with “Just in time distribution” which significantly improved the performance and met the expectations.
Q2. What are the key elements of JITD program?
Ans2. The main problem that Barilla spa faced was caused by the demand fluctuations. The demand of goods fluctuated significantly week by week. The initial step was to determine how the demand pattern looks like. The demand pattern at distribution centers showed a significant fluctuation. The next step was to determine the impact of these fluctuations, and how much does it cost to handle these fluctuations. Inefficient production, excessive finished goods inventory, low utilization of central distribution and high delivery costs were affecting the progress. The key steps used by the JITD were
Q1. What problem was JITD trying to solve?
Ans1. The JITD program was trying to meet the extreme variation in demand with which was straining Barilla’s manufacturing and logistics operations. For example, some of the products required extreme heat and when the demand would suddenly increase, the production could not keep up with the demand. On the other hand holding large quantities of goods to meet the distributers’ requirements was resulting in very high inventory cost. Some manufacturing personals wanted distributers and retailers to carry more inventories to control the fluctuations in their orders while some thought that the distributers and retailers were already carrying too many goods. Brando Vitali, the director of logistics though that there should be an alternative approach to fulfill the order requirements. He thought that both the distributors and retailers are suffering from thinning margins; hence we should find a way to take costs out of our distributing channel without compromising the service. He thought that they could improve the operations both for themselves and their customers just by determining the right quantity of goods and delivery schedules. He came up with “Just in time distribution” which significantly improved the performance and met the expectations.
Q2. What are the key elements of JITD program?
Ans2. The main problem that Barilla spa faced was caused by the demand fluctuations. The demand of goods fluctuated significantly week by week. The initial step was to determine how the demand pattern looks like. The demand pattern at distribution centers showed a significant fluctuation. The next step was to determine the impact of these fluctuations, and how much does it cost to handle these fluctuations. Inefficient production, excessive finished goods inventory, low utilization of central distribution and high delivery costs were affecting the progress. The key steps used by the JITD were