Advanced: Computerized materials control system Car Parts Ltd operates a franchise system, with shops owned by individual businessmen. Car Parts Ltd has, over the years, built up a national network of 70 shops which sell car spares and accessories. The annual sales of the 70 shops are £30 million. The shops vary in size and in turnover with individual annual sales upwards of £300 000. II is a very competitive business.

Car Parts Ltd has two warehouses, one in the north and the other in the south, which supply the shops. Each shop places a weekly order which is shipped out usually within seven days. The weekly ordering is undertaken by the shop owner completing a 50 page (multicopy) order form based on Car Parts Ltd's 7000 item catalogue. Each catalogue item is listed on the order form, which is completed by the entry of the quantity required against the catalogue number. Normally each warehouse only supplies those shops assigned to it, and the delivery drivers have prescribed weekly delivery runs. It has been known for a warehouse, when out of stock of various parts, to request a special delivery from the other warehouse to cover its deficiency.

Each warehouse employs individuals who have been with the company for some years and are trusted by the management. A physical stocktaking occurs only annually, the result of which is compared with the stock cards maintained by the purchasing department. Any disparities are corrected then, though staff frequenUy are not sure how they arose. The stock record is maintained on a manual basis with separate stock cards for each item. These stock cards are updated by a change in stock status, requisition by a shop, or goods delivered by a supplier. Bin cards are also kept in the warehouse and updated by the staff working there. Warehouse Staff can ask purchasing to place an order, but this is usually done by the purchasing department after inspection of the card when it is being updated. The minimum quantity carried for each part is based on the purchasing staff's experience of demand for the part and the delivery time. At present each warehouse has its own purchasing department with its staff being assigned responsibility for particular product ranges. When ordering, the purchasing staff use vendors' part numbers which, because of the wide range of parts and numbers, can give rise to costly and time wasting errors due to human failings in writing out the part numbers correctly.

At present Car Parts Ltd does not attempt to assess the profitability of each shop, nor does it measure the value of stock held by each shop. It knows from experience that some shop owners will try to satisfy some important customers by purchasing the parts required from competing outlets, rather than ask the customer to wait. perhaps for a fortnight for delivery. Senior management is considering the introduction of computers into the company's operations.
Requirements:

(a) Identify the problems you see in the ordering, stock, and purchasing systems described above. (5 marks)

(b) Indicate how a computerized system could help solve the present problems you have described in

(a) above.

(c) Identify other areas of management and control where the computer system you have described in

(b) would help in the running of the shops and the warehouse. (5 marks)

(d) Briefly describe problems that might arise when introducing the computerized system into Car Parts ltd.