Wolf Motors is expanding its business and is very excited about the opening of its fourth auto dealership, which is also the first “auto supermarket” in the network. Three different makes of cars (Chevrolets, Nissans and Volkswagens) are sold at the same location. John Wolf, the president and owner of the dealership, started the business 15 years ago with the purchase of a bankrupt Dodge dealership and has grown steadily in size and reputation. He attributed the success to three highly interdependent factors: volume, hassle-free buying experience by having one price-lowest price policy, and after sale service. High-quality service after sale depended on the following three essential components:
(i) presence of a highly qualified, well-trained staff of service technicians,
(ii) latest tools and technologies to support diagnosis and repair activities, and
(iii) sufficient supply of service parts and materials to provide the services without delay.
Each of the four dealerships purchased its own service parts and materials based on the forecasts derived from historical demand data, which accounted for factors such as seasonality. The acquisition of the auto supermarket dealership put an increased strain on both finances and space, with the need to support three different automobile lines at the same facility. Wolf is wondering about what could be done in the purchasing area to address some of these concerns and alleviate some of the purchases.
The effective management of materials is not only essential in manufacturing environments but also vital in supporting and providing quality services effectively and efficiently. Some of the issues that Wolf Motors is facing currently are outlined as follows:
1. Should Wolf Motors consider a centralized corporate level Materials or should it remain decentralized as it is at present?
2. Should an automated EDI inventory management system that interconnects with each of the dealerships and interfaces with the...