Reviewing the Inventory Management for CompositeMed
REPORT: SOLUTIONS FOR INVENTORY POLICY FOR COMPISITEMED
In this report, the aggregated results from the analyses of a different alternatives of inventory policies for CompositeMed company will be presented. Also according to those results, the most profitable alternatives are going to be commented and analyzed more, and then the decision is going to be made about the optimal one which should be suggested to the management of CompositeMed. Additionally, the shortcomings of this analysis are going to be emphasized at the end.
The following Table shows the different Scenarios that can be suggested as alternatives of inventory policies to the management of CompositeMed . For each Scenario the Table presents the optimal ordering quantities, Total annual costs and Profits. It is easy to noticed and understand which of them are more profitable from others.
*The given Table for the Scenario D shows the NPV ( marginal profit) if CompositeMed accept the offer from its subcontractor to buy jointly EDI communication software which will reduce ordering costs. The calculations for this options shows that this investment is not profitable for the company.
Let us markup the three most profitable alternatives respectfully:
1. Scenario B
2. Scenario C
3. Scenario F
Even thought it would be easy to say that the Management of CompositeMed should choose the most profitable option, in other words, the Scenario B, but the closer look of each of Scenario Ordering quantity ( in units) Total annual costs (€) Profit annual (€) Scenario Status Quo TCq= π
π= Scenario B TCq= π=
π= Scenario D / TCq= π= -209816,1 ⃰
π= Scenario F TCq= π=
3 Production Management Case Study Assignment 2010(6)
those three alternatives is necessary in order to be that that is a right decision. As it is already mentioned, Scenario B, consider switching to... [continues]
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