Daniel Holbrook, an expeditor at the local warehouse for Furniture City, sighed as he moved boxes and boxes of inventory to the side in order to reach the shelf where the particular item he needed was located. He dropped to his hands and knees and squinted at the inventory numbers lining the bottom row of the shelf. He did not find the num- ber he needed. He worked his way up the shelf until he found the number matching the number on the order slip. Just his luck! The item was on the top row of the shelf! Daniel walked back through the warehouse to find a ladder, stumbling over boxes of inventory littering his path. When he finally climbed the ladder to reach the top shelf, his face crinkled in frustration. Not again! The item he needed was not in stock! All he saw above the inventory number was an empty space covered with dust!

Daniel trudged back through the warehouse to make the dreadful phone call. He dialed the number of Brenda Sims, the saleswoman on the kitchen showroom floor of Furniture City, and informed her that the particular light fixture the customer had re- quested was not in stock. He then asked her if she wanted him to look for the rest of the items in the kitchen set. Brenda told him that she would talk to the customer and call him back.

Brenda hung up the phone and frowned. Mr. Davidson, her customer, would not be happy. Ordering and receiving the correct light fixture from the regional warehouse would take at least two weeks.

Brenda then paused to reflect upon business during the last month and realized that over 80 percent of the orders for kitchen sets could not be filled because items needed to complete the sets were not in stock at the local warehouse. She also real- ized that Furniture City was losing customer goodwill and business because of stock- outs. The furniture megastore was gaining a reputation for slow service and delayed deliveries, causing customers to turn to small competitors that sold furniture directly from the showroom floor.

Brenda decided to investigate the inventory situation at the local warehouse. She walked the short distance to the building next door and gasped when she stepped in- side the warehouse. What she saw could only be described as chaos. Spaces allocated for some items were overflowing into the aisles of the warehouse while other spaces were completely bare. She walked over to one of the spaces overflowing with inven- tory to discover the item that was overstocked. She could not believe her eyes! The warehouse had at least 30 rolls of pea-green wallpaper! No customer had ordered pea- green wallpaper since 1973!

Brenda marched over to Daniel demanding an explanation. Daniel said that the warehouse had been in such a chaotic state since his arrival one year ago. He said the inventory problems occurred because management had a policy of stocking every fur- niture item on the showroom floor in the local warehouse. Management only replen- ished inventory every three months, and when inventory was replenished, management ordered every item regardless of if it had been sold. Daniel also said that he had tried to make management aware of the problems with overstocking unpopular items and understocking popular items, but that management would not listen to him because he was simply an expeditor.

Brenda understood that Furniture City required a new inventory policy. Not only was the megastore losing money by making customers unhappy with delivery de- lays, but it was also losing money by wasting warehouse space. By changing the inventory policy to stock only popular items and replenish them immediately when they are sold, Furniture City would ensure that the majority of customers receive their furniture immediately and that the valuable warehouse space was utilized effectively.

Brenda needed to sell her inventory policy to management. Using her extensive sales experience, she decided that the most effective sales strategy would be to use her kitchen department as a model for the new inventory policy. She would identify all kitchen sets comprising 85 percent of customers orders. Given the fixed amount of warehouse space allocated to the kitchen department, she would identify the items Furniture City should stock in order to satisfy the greatest number of customer or- ders. She would then calculate the revenue from satisfying customer orders under the new inventory policy, using the bottom line to persuade management to accept her policy.

Brenda analyzed her records over the past three years and determined that 20 kitchen sets were responsible for 85 percent of the customer orders. These 20 kitchen sets were composed of up to eight features in a variety of styles. Brenda listed each feature and its popular styles:

MAN SCI - Google Docs X + X C Q Search Ecosia Search # MAN SCI * D Following Share File Edit View Insert Format Tools Add-ons Help Last edit was 5 minutes ago no $ A 7 100% Normal text Arial - 8 + B I U A / CO P O . B E = = 13 B E B E X Q. / Editing 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 3 1 1 4 1 1 1 5 1 1 1 6 1 7 1 1 1 2 1 1 1 9 1 1 1 10 1 1 112 1 1 1 13 1 1 14 1 1 15 16 1 1 117 1 1 18 kitchen sets were composed of up to eight features in a variety of styles. Brenda listed each feature and its popular styles: Floor Tile Wallpaper Light Fixtures Cabinets (T1) White textured (W1) Plain (L1) One large (C1) Light solid tile ivory paper rectangular frosted fixture wood cabinets (T2) Ivory textured (W2) Ivory (L2) Three small square (C2) Dark solid + tile paper with frosted fixtures wood cabinets dark brown pinstripes (T3) White (W3) Blue paper (L3) One large oval checkered tile with marble (C3) Light wood with blue trim texture frosted fixture cabinets with glass doors (T4) White (W4) Light (L4) Three small frosted (C4) Dark wood checkered tile yellow paper globe fixtures with light yellow with marble cabinets with glass doors trim texture Countertops Dishwashers Sinks Ranges (01) Plain light (D1) White energy- (51) Sink with separate (R1) White wood saving dishwasher hot and cold water electric oven countertops taps (02) Stained light (D2) Ivory energy- (52) Divided sink with (R2) Ivory wood countertops saving dishwasher separate hot and cold electric oven water taps and garbage disposal (04) Ivory ($4) Divided sink with (R4) Ivory gas acquer- coated countertops one hot and cold water tap oven and garbage disposal 1231 124 + LO 9 ^ ()) ENG 12:40 pmSet 1 T1 T2 13 T4 W1 W2 W3 W4 1 12 13 14 C1 C2 03 04 01 02 03 04 D1 D2 51 52 53 54 R1 R2 R3 R4 X X X Set 2 X X X X X X X X Set 3 X X X X X X X X X Set 4 X X X X X X X Set 5 X X X X X X X X X Set 6 X X X X X X X Set 7 X X X X X X X X X Set 8 X X X X X X X X Set 9 X X X X X X X Set 10 X X X X X X X X X Set 11 X X X X X X X Set 12 X X X X X X X X X Set 13 X X X X X X X Set 14 X X X X X X Set 15 X X X X X X X X X X Set 16 X X X X X x X Set 17 X X X X X X Set 18 X X X X X X X Set 19 X X X X X X X Set 20 X X X X X X X X X X X