Inventory Proposal Qrb/501
Inventory Proposal - Team A
QRB/501
Inventory Proposal - Team A
Team A has chosen Costco as its company to analyze because each of the team members is familiar with Costco. Costco is a retail wholesaler warehouse that was founded in 1983 in Issaquah, Washington. Costco cuts out the “middle man” by selling its customers items in bulk at low prices. In our study, Costco has a problem with its inventory that needs to be resolved. Team A will be using the Summer Historical Inventory Data provided by University of Phoenix and interpreting the numbers as if it were Costco’s data. Scenarios developed are purely for the educational purposes of Team A’s work. Raw Data | | | | | | | | | Month | Year 1 | Year 2 | Year 3 | Year 4 | Total | Mean | Index | July | 18000 | 45100 | 59800 | 35500 | 158400 | 39600 | 0.935 | Aug | 19800 | 46530 | 30740 | 51250 | 148320 | 37080 | 0.876 | Sept | 15700 | 22100 | 47800 | 34400 | 120000 | 30000 | 0.708 | Oct | 53600 | 41350 | 73890 | 68000 | 236840 | 59210 | 1.398 | Nov | 83200 | 46000 | 60200 | 68100 | 257500 | 64375 | 1.52 | Dec | 72900 | 41800 | 55200 | 61100 | 231000 | 57750 | 1.364 | Jan | 55200 | 39800 | 32180 | 62300 | 189480 | 47370 | 1.119 | Feb | 57350 | 64100 | 38600 | 66500 | 226550 | 56637.5 | 1.337 | Mar | 15400 | 47600 | 25020 | 31400 | 119420 | 29855 | 0.705 | April | 27700 | 43050 | 51300 | 36500 | 158550 | 39637.5 | 0.936 | May | 21400 | 39300 | 31790 | 16800 | 109290 | 27322.5 | 0.645 | June | 17100 | 10300 | 31100 | 18900 | 77400 | 19350 | 0.457 | Inventory Management Problem The problem is two-fold in that Costco has too-narrowly defined its performance measures, and it does not encompass all of the aspects and factors that the company should use to determine its seasonal inventory. In addition the company’s managers have caused Costco to become the victim of the “bullwhip effect.” This means they anticipated heavy demand during one season but were left with
QRB/501
Inventory Proposal - Team A
Team A has chosen Costco as its company to analyze because each of the team members is familiar with Costco. Costco is a retail wholesaler warehouse that was founded in 1983 in Issaquah, Washington. Costco cuts out the “middle man” by selling its customers items in bulk at low prices. In our study, Costco has a problem with its inventory that needs to be resolved. Team A will be using the Summer Historical Inventory Data provided by University of Phoenix and interpreting the numbers as if it were Costco’s data. Scenarios developed are purely for the educational purposes of Team A’s work. Raw Data | | | | | | | | | Month | Year 1 | Year 2 | Year 3 | Year 4 | Total | Mean | Index | July | 18000 | 45100 | 59800 | 35500 | 158400 | 39600 | 0.935 | Aug | 19800 | 46530 | 30740 | 51250 | 148320 | 37080 | 0.876 | Sept | 15700 | 22100 | 47800 | 34400 | 120000 | 30000 | 0.708 | Oct | 53600 | 41350 | 73890 | 68000 | 236840 | 59210 | 1.398 | Nov | 83200 | 46000 | 60200 | 68100 | 257500 | 64375 | 1.52 | Dec | 72900 | 41800 | 55200 | 61100 | 231000 | 57750 | 1.364 | Jan | 55200 | 39800 | 32180 | 62300 | 189480 | 47370 | 1.119 | Feb | 57350 | 64100 | 38600 | 66500 | 226550 | 56637.5 | 1.337 | Mar | 15400 | 47600 | 25020 | 31400 | 119420 | 29855 | 0.705 | April | 27700 | 43050 | 51300 | 36500 | 158550 | 39637.5 | 0.936 | May | 21400 | 39300 | 31790 | 16800 | 109290 | 27322.5 | 0.645 | June | 17100 | 10300 | 31100 | 18900 | 77400 | 19350 | 0.457 | Inventory Management Problem The problem is two-fold in that Costco has too-narrowly defined its performance measures, and it does not encompass all of the aspects and factors that the company should use to determine its seasonal inventory. In addition the company’s managers have caused Costco to become the victim of the “bullwhip effect.” This means they anticipated heavy demand during one season but were left with
References: Basu, Chirantan, (n.d.) What Are The Two Types Of Inventory Accounting Systems? Demand Media for Houston Chronicle. Retrieved September 9, 2012 from http://smallbusiness.chron.com/two-types-inventory-accounting-systems-20836.html Bosari, Jessica, (n.d.) What is Distressed Inventory? AskDeb.com. Retrieved from http://www.askdeb.com/inventory-management/distressed/ Brinlee, Doug (n.d.) Common Inventory Management Problems, AskDeb.com Retrieved September 23, 2012 from http://www.askdeb.com/inventory-management/problems/ Costco & IRI Team (2009) Costco: Inventory Management. Retrieved from http://costcoteam3.blogspot.com/2009/05/costco-inventory-management.html Inc.com. (2012), Inventory. Retrieved September 16, 2012 from http://www.inc.com/encyclopedia/inventory_pagen_2.html Investopedia (n.d.) Definition of ‘Economic Order Quantity – EOQ’. Retrieved from http://www.investopedia.com/terms/e/economicorderquantity.asp#axzz221TVQVu2 Scribd.com. (2012). The advantages and disadvantages of FIFO method. Retrieved September 16, 2012 from http://www.scribd.com/doc/25162137/The-Advantages-and-Disadvantages-of-FIFO-Mehtod {sic}