Ava Beane, the newly hired Manager of Inventory Planning, would like your assistance in evaluating several alternative courses of actions that she is considering to address the inventory challenges faced by Scientific Glass. Please answer the following questions to help her analyze her options.

The data for this analysis is provided in the exhibits in the case and also in the worksheet supplement for the Scientific Glass case in the HBS course-pack.

1.Given the finance department's forecast of 20% increase in sales, how much more will SG have to invest in inventory to deal with the increase if nothing changes in its inventory management policies? Since there is no price change, assume that COGS will increase by 20% as well. (2 points)

2.Estimate the inventory benefits associated with each of the policy changes proposed by Gregory and Hayes and determine if the policy change will overcome the inventory increase due to 20% increased sales. (parts a and b should be supported by quantitative analysis)

a.Enforcing 99% inventory level (Assume 10% of the parts represent 10% of the inventory value, and the current service level for these parts is 99.9%. Organize your calculations in a table as shown below)? (1 point)

b.Elimination of trunk stock (1 point)

c.Creation of daily/weekly inventory reports (1 point)

d.Periodic physical audits (1 point)

3.Assuming a service level of 99%, what will be the impact on the inventory investment if the number of warehouses is reduced from the current 8 warehouses to

a.2 warehouses (2 points)

b.1 warehouse (2 points)

Use the information about the two representative parts to estimate the increase/decrease in inventory resulting from the warehouse consolidation. Note that this change only affects finished goods inventory. Assume that there is no change in the lead-time of 1 week after consolidation.Use weekly demand in your calculations.

Convert biweekly demand to weekly demand as follows:

Weekly mean = (biweekly mean)/2;

Weekly std. dev = (biweekly std. dev)/sqrt(2)

Organize your calculations as shown in the table below.

Product

Warehouses (WHs)

Z-Value

Calculation for each warehouse

Total avg inv for all WHs

% Saving

Weekly Mean

Weekly Std Dev

POU

Q

Avg Onhand

SS

Beg Onhand

Avg pipeling

avg inv

Griffin Beaker

8

2

1

Erlenmeyer Flask

8

2

1