Consolidated Electric is a wholesale distributor of electrical products primarily to electrical contractors. The company wants to design a system for inventory management of the 20,000 line-items carried in stock. A description is given in the case of the business environment and the current inventory control system in use.
The purpose of this case is to expose students to many of the issues encountered in inventory system design. These issues include: forecasting, replenishment decision rules, error control, multiple item interactions, ABC analysis, and top management control. The case also asks the student to describe how the system they design will help improve inventory management in the company.
1. Design an inventory control system for this business. Provide the formulas that you would use for a P System, Q system or other system you design. Compare these to the formulas currently used. Examine the data from the Appendix to note any peculiarities in demand that your system might encounter. What would you do about them?
2. Describe how the system you have designed will help the company meet customer-service and cost objectives?