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Question 4: Importance of Inventory Management Refer to the summary of newspaper article below and answer the following questions. a) Why is inventory an important
Question 4: Importance of Inventory Management Refer to the summary of newspaper article below and answer the following questions. a) Why is inventory an important asset to manage and control? b) What were the impacts to Fujifilm SonaSite Inc and Toyota when chips were not readily available for their production? Article extracted from Bloomberg dated 28 Dec 2021 "The Year Chip Shortages Changed the World" by Debbie Wu In 2021, users of everything from iPhones and PlayStations to cars and ultrasound machines were jolted awake to a new reality: All these things need silicon chips, and there aren't enough of them. Chip booms and busts are nothing new, but the unprecedented severity of this year's crunch lent the issue added geopolitical weight. The shortage showcased how globalized and interconnected the industry has become. At the same time, it galvanized countries to build up their domestic manufacturing in order to ensure some measure of self-reliance - an effort that's just getting going. The chip shortage came into view at the beginning of the year, when carmakers began to complain that they didn't have the silicon to satisfy an unexpectedly quick recovery in demand. The fretting was justified: while poor planning was partly to blame, shortages cost auto companies an estimated $200 billion in sales this year. Other industries were just as desperate. Ultrasound machine provider Fujifilm SonoSite Inc. paid $65 for a chip that usually costs $1.49. Even Apple Inc., the largest corporate buyer of chips with superior supply chain management practices, couldn't escape unscathed. The Cupertino, California giant said it lost $6 billion in revenue in the last quarter due to supply constraints - which will cost the company more than $6 billion again in the current quarter. Why can't suppliers just make more? This year's predicament showed that silicon manufacturing is a timeconsuming and expensive venture. Building a chip fabrication plant takes at least two to three years and can easily cost $10 billion or more. For instance, Taiwan Semiconductor Manufacturing Co. is spending a record $100 billion over a three-year period to grow capacity. The company could spend $29 billion on its 2nm fabrication, the mayor of the central Taiwanese city of Taichung reportedly said this week
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