1. Explain the following concepts
1. Extended enterprise
2. Terminal delays
3. Reorder level
5. Pipeline inventory
Read the case and answer the following questions
Mumbai Flour mills provide high-quality bakery flours to commercial bakers as well as to the consumer market. The commercial buyers have consistent demand and brand-loyalty, whereas consumers have minimal brand-loyalty but also generally prefer known names over store brands. Demand is seasonal for the flours with the annual break occurring just before Diwali and slacking off dramatically during January and February. To offset these both, Mumbai Flour Mills and its major supermarket chain-accounts carry out special deals and sales promotions.
The Production planning Dept. of the company located at Akola, Maharashtra, has the responsibility for controlling the inventory levels at the plant warehouse at Nagpur as well as three distribution centres located at Nasik in Maharashtra, Bhopal in Madhya Pradesh and Hyderabad in Andhra Pradesh. Planning has been routinely based on past experience and history. No formal forecasting is performed. Distribution centres get their requirements by rail from Nagpur. The lead time of replenishment from Nagpur to distribution centres is 7 days. The replenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used. In case of any emergency demand, eighteen pallets can be made available by truck with a 3 days transit time.
Recently the company has experienced two major stock out for its consumer-size 5 Kg. sacks of refined quality white flour. One of these was due to problems in milling operations, the other occurred when marketing initiated a “buy one, get one free” coupon promotion. Since these events, the planning has become overly cautious and errs on the side having excess inventories at the distribution centres. Additionally, two other events have... [continues]
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