Mba550 Managing Inventory In A Supply Chain Worksheet

Managing Inventory in a Supply Chain Concepts Worksheet

University of Phoenix

February 5, 2008

Graded A

Working Capital Management Concepts Worksheet

Concept Application of Concept in the Simulation Reference to Concept in Reading

Just-in-time

Kuiper Leda in the Republic of Novamia is an electronic components manufacturer. The company has grown significant in the last two years according to the 2008 University of Phoenix simulation. The company is experiencing an increase in demand for their products. Kuiper Leda can produce the product and save inventory carrying cost by using a just-in-time inventory management process. Inventory control will be essential to Kuiper Leda. "Just-in-time manufacturing uses classical production -consumption inventory designed to integrate activities to achieve high-volume, high-quality production using minimal inventories of raw materials, work-in-process, and finished goods." (Chase, Jacobs, Aquilano, p. 589, 2005)

Forecasting and time series analysis

Kuiper Leda needs to be able to forecast the needed changes in the production process in order to meet customer demand. The concept of forecasting is vital for Kuiper Leda because it enables management to make decisions regarding the quest for their product, schedules, staffing, and production. This will allow the company to use a time series analysis as part of the forecast inventory management process. "Forecasts permit adjusting schedules and varying labor and materials." (Shmula, 2007)

"time series analysis, is based on the idea that data relating to past demand can be used to predict future demand or cyclical influences" (Chase, Jacobs, & Aquilano, p. 513, 2005)

Demand Management, dependent demand and cash conversion cycle

Kuiper Leda recently received a large order for electronic control units, which are essential parts of the power train assemblies. This increase need for electronic control units are based on orders placed by the vendor consequently the company would not increase the number of electronic control units produced with out the supporting documentation or dependent demand of an actual order request from a vendor. Demand management allows the company to use inventory management more effectively, cash conversion cycle and cost of goods. "Dependent demand is the demand for a product or service caused by the demand for other products or services." (Chase, Jacobs, & Aquilano, p. 512, 2005)

"The purpose of demand management is to coordinate and control all sources of demand so the productive system can be used efficiently." (Chase, Jacobs, & Aquilano, p. 512, 2005)

Improving supply chain operating efficiency through casual relationship forecasting

Kuiper Leda could use casual relationship forecasting based on any independent variable that leads to a change in the need for their product. This information would help Kuiper Leda to determine that when an increase volume of units are needed due to the number of cars being built this may mean an increase in the need for electronic control units by the automotive industry. Additional electronic control units could be needed due to the Iraq war. "Casual relationship forecasting is when one occurrence causes another. If the causing element is known far enough in advance, it can be used as a basis for forecasting." (Chase, Jacobs, & Aquilano, p. 537, 2005)

Capacity Planning using Collaborative Planning, Forecasting, and Replenishment (CPFR)

Kuiper Leda will have to distribution demand effectively, avoid over-stocking and make sure