Dell has adopted the (JIT just-in-time) inventory method as its method of inventory management. Dell uses this method to reduce inventory and eliminate waste. Before this method was used, Dell Computers had problems managing its budget, since using JIT the company has felt a large improvement in inventory turnover and a lower amount of days inventory is stocked and stored.. As a result of computers depreciate at a high rate; if computers are sitting in inventory, it loses a ton of value quite rapidly. The company achieved improvement its success and improvements by switching its focus to building customized orders and selling directly to the customer. By only carry supplies needed for specific orders, Dell was able to implement costs associated with storing inventory. JIT eliminates carrying costs in inventory management. Consequently, Dell has low overhead costs by keeping its inventory to the bare minimum. Within four years, Dell’s revenues grew from $2 billion to $16 billion, earnings per share increased by 62 percent. Based on the table below, it identifies to show from 1992 to 2001. Dell drastically cut down on the time it held inventory in stock. With each passing week, it was estimated the inventory depreciated by 1%. Dell’s Inventory Turnover Data
Year Inventory Turnover Week's Inventory 1992 4.79 10.856 1993 5.16 10.078 1994 9.4 5.532 1995 9.8 5.306 1996 24.2 2.149 1997 41.7 1.247 1998 52.40 0.992 1999 52.40 0.992 2000 51.4 1.012 2001 63.50 .819 In conclusion, two things resulted from Dell following the JIT method. First, Dell was able to align its inventory and...
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