Operation Analysis and
Management
Scientific Glass, Inc.:
Inventory Management
Term: Term 1, Fall
Scientific Glass, Inc.: Inventory Management
1. Introduction
This case mainly talked about production and operations management issues of Scientific Glass, Inc. which is a mid-size company in this increasingly competitive market. With the rapid growth of sales, the company deals with how to manage inventory to catch up with a large amount of orders and meanwhile decrease costs from past actions. In the first part, critical inventory management issues are recognized. These primary issues also lead to a lot of detailed problems that are all analyzed one by one. In the second part, alternative solutions are evaluated from advantages and disadvantages. Last but not least, based on previous analysis, there is a conclusion that it is no guarantee that SG’s future was secure. SG will be faced with more challenging internal inventory management issue and external competitors’ pressure.
2. Critical Issues
A disturbing trend: Inventory balances were increasing substantially, which tied up extra capital the company needed to fund its growing operations. This means inventory occupied too much capital which can be used to invest other areas for company growth. Also, as mentioned, debt to capital ratio exceeded the target level of 40%.
3. Alternative Solutions for Issues
Centralizing or decentralizing warehousing function
a) Continuing with current warehouses: All regions will be supplied with its warehouse if there is no stock-out occurs. However, the annual rental and operation costs would be a big expenditure for SG.
b) One central warehouse: Adoption of this solution is to recentralize the North American warehousing function in Waltham and close down all or some of the regional warehouses. Customer orders will be sent out from this single warehouse.
c) Two centralized warehouse: This was a good...