Inventory Management Case Study

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The first and one of the most important concepts in this case to understand is inventory management and the objectives of good inventory management . Inventory management can be defined as “the practice of overseeing and controlling the quantities of finished products for sale” (“Inventory Management,” n.d.). Thus, in relation to this case, inventory management is the practice of overseeing and controlling the various amounts of food and drinks for sale. Good inventory management is crucial for the overall success of Wegman’s and every other business entity’s operations. Inventory management is concerned with achieving a high level of customer satisfaction and maintaining inventory costs (Stevenson, 2015, pg. 550). Ultimately, customer …show more content…

Continuously, controlling inventory costs is essential to good inventory management. This assertion is based on the fact that inventory is usually one of the major assets of a business, and “represents a major investment that is tied up” until it is sold (“Inventory Management,” n.d.). With this being said, poor inventory management could be a major cost to a business such as Wegmans. These imposed costs could be caused by missed deliveries, lost sales and customers, and production bottlenecks. Furthermore, an overstocked inventory could result in fixed costs from tied up space and investments (Stevenson, 2015, pg. 550). These results could potentially …show more content…

Capacity planning can be defined as “the process of determining short-term capacity requirements” (Stevenson, 2015, pg. 513). This method uses production schedules that are based on sales demand forecasts. The information needed to undergo the capacity planning process includes “planned order releases for the [materials requirement plan], the current shop load, routing information, and job times” (Stevenson, 2015, 513). Once managers have all the aforementioned information, they can then generate load reports for each work center (Stevenson, 2015, 513). These reports will then inform production managers of the appropriate adjustments that must be made in order to match demand. The capacity planning cycle is then restarted. This process will affect inventory if production adjustments require the modification of inventory. For instance, more inventory may have to be ordered which will increase inventory costs. In order to successfully manage inventory, Wegmans must be aware of the various effects that could result from these inventory

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