1. Would using an order interval other than every six weeks reduce costs? If so, what order...
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2. Would you recommend changing to the optimal order interval? Explain.
UPD Manufacturing produces a range of health care appliances for hospital as well as for home use. The company has experienced a steady demand for its products, which are highly regarded in the health care field. Recently the company has undertaken a review of its inventory ordering procedures as part of a larger effort to reduce costs. One of the company's products is a blood pressure testing kit. UPD manufactures all of the components for the kit in- house except for the digital display unit. The display units are ordered at six- week intervals from the supplier. This ordering system began about five years ago, because the supplier insisted on it. However, that supplier was bought out by another supplier about a year ago, and the six- week ordering requirement is no longer in place. Nonetheless, UPD has continued to use the six- week ordering policy. According to purchasing manager Tom Chambers, “Unless somebody can give me a reason for changing, I'm going to stick with what we've been doing. I don't have time to reinvent the wheel.”
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