Starbucks Coffee Company is a gourmet coffee provider with over 17,000 stores in 55 countries worldwide in fiscal year 2011 (Starbucks Company, 2011, p. 3). Its main focus is to provide gourmet coffees, teas and related beverages in its stores worldwide. To ensure that Starbucks continues to provide superior products and services, it must ensure that it has in its stores enough inventory to service its valued customers, without sacrificing quality and with decreasing the possibility of waste. Starbucks inventory numbers can be derived from its financial statements; however, the numbers given are only a summary as the actual details are proprietary and cannot be retrieved through any other method. The Starbucks inventory reserves were $25.5 for 2008, $21.1 million in 2009; $18.1 million in 2010, and $21.1 million in 2011. “Inventory reserves are based on inventory reserves are based on inventory turnover trends, historical experience and application of the specific identification method” (Starbucks, 2012). In greater detail, Starbucks inventories for 2008, 2009, 2010, and 2011 are as follows: Inventory in Millions (in millions):
| 2008| 2009| 2010| 2011|
Coffee – Unroasted| $377.7| $381.6| $238.3| $431.3| Coffee - Roasted| $89.6| $76.7| $95.1| $246.5| Other Merchandise held for sale| $120.6| $116.0| $115.6| $150.8| Packaging & other Supplies| $104.9| $90.6| $94.3| $137.2| Total| $692.8| $664.9| $543.3| $965.8|
Starbucks’ level of inventory vary depending on seasonality and commodity price variations. Further, since Starbucks contracts with its suppliers, it purchases certain amounts based on fixed contracts (Starbucks, 2012). An interview with a former Starbucks Manager, Anthony Costa, provided information that Starbucks uses the P-system. The P-System or Periodic System is a system wherein the sock is reviewed based on its par which is a certain level of...