4. Suppose Realco produces 20,000 breadmakers every week, rather than 40,000 every other week. According to the master schedule record, what impact would this have on average inventory levels? Two years ago, Johnny Chang’s company, Realco, introduced a new breadmaker, which, due to its competitive pricing and features, was a big success across the United States. While delighted to have the business, Johnny felt uneasy about the lack of formal planning surrounding the product. He found himself constantly wondering, “Do we have enough to meet the orders we’ve already accepted? Even if we do,will we have enough to meet expected future demands? Should I be doing something right now to plan for all this?”

To get a handle on the situation, Johnny decided to talk to various folks in the organization. He started with his inventory manager and found out that inventory at the end of last week was 7000 units. Johnny thought this was awfully high.

Johnny also knew that production had been completing 40,000 breadmakers every other week for the last year. In fact, another batch was due this week. The production numbers were based on the assumption that demand was roughly 20,000 breadmakers a week. In over a year, no one had questioned whether the forecast or production levels should be readjusted.

Johnny then paid a visit to his marketing manager to see what current orders looked like. “No problem,” said Jack Jones, “I have the numbers right here.” 

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WEEK PROMISED SHIPMENTS 23,500 23,000 21,500 12345678 15,050 13,600 11,500 5400 1800