Management Case Study: The Parts Emporium Case
Introduction
The Parts Emporium case focuses on the challenges that the new materials manager Sue McCaskey is facing at a wholesale distributor of the auto parts in Chicago. In her newly created management position, she looks for different ways to cut the companies bloated inventories as well as improving their customer service process. In addition to this, Ms. McCaskey learned that the firm's back orders had excessive cost sales because their inventories were higher than expected due to the new facility, and their sales did not increase. In particular, the purchasing manager Joe Donnell could not give Ms. McCaskey a detailed inventory summary that would show inventory turnover, so she decided to select a small sample of about 100 items
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Based on the above illustration, Parts Emporium needs to streamline their processes, keep their products organized, increase customer service by investing in research and development to understand demands as well as make sure that the company's cycle services are off 95%.
Question # 2
The company's lot size for the EG151 exhaust gasket is 150 units. This unit amount shows that Parts Emporium is ordering 150 units consequently when there is a demand. The company cannot handle their requests with the current lot size for their products, which is an issue with not meeting customer needs. Furthermore, Parts Emporium will have to increase their lot size for the EG151 exhaust gasket to 339 meet the EOQ that will help with preventing storage problems. In fact, it will contribute to cut the company's annual inventory costs from 845.95 to 329.27. They will get a savings of $516.68. As a matter of fact, if Dan Block and Ed Spriggs implements Ms. McCaskey's recommendations the company's total annual ordering cost will give them a savings of $310 per
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It needs to have a lot size of 317 because now there is too much product in the inventory. If the company cut their stock, it will help them to acquire a savings of 310 per year for the EG151, since the belts will be $80.00 per year. Also, the safety stock has a backorder problem, which is causing a stockout issue; however, if Mr. Block and Mr. Spriggs welcome Ms. McCaskey's suggestions the safety stock will prevent future stockout
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