Case Blanchard
Introduction
In the course of Operations Management was given to us a Harvard Business case study, “Blanchard Importing and Distributing Co., Inc”. The company is a liquor distributer and bottler which, is struggling with inventory management problems. The aim of our work is to help the trainee, Hank Hatch, analyzing the company’s scheduling system and present recommendations with the purpose of solving problems intrinsically related with Inventory management.
Firstly, we are going to calculate the EOQ and ROP quantities based on 1971’s demand, then we compare this values with the ones obtained upon the implementation of the Scheduling system, in 1969, as well as with the scheduling system invented by Bob and Elliot .
We are also going to approach the differences between the formal and the informal systems, choosing the best one for the company and finally present our recommendations which are aimed to solve the detected problems. Economic Order Quantity Model
Operations Managers regularly face with decisions of “How much” or “How many” of something to produce or buy in order to satisfy the internal and external requests for a certain item. The majority of those decisions do not always take into account the cost consequences that would occur. The Economic Order Quantity Model, and also so-called “EOQ Formula”, is often very helpful in guiding managers about the order quantity decision regarding consequences. The EOQ Model was developed by Ford W. Harris in 1913 and it corresponds to the level of inventory that minimizes the total holding costs and ordering costs of the inventory.
Graphic
In other words, the Economic Order Quantity is known as the cost-minimizing order-quantity which takes in consideration the existing tradeoff between ordering cost and storage cost.
Basic assumptions of this Model:
Replenishment occurs instantaneously;
Demand is constant and not stochastic;
There is a fixed setup cost K independent of the order
In the course of Operations Management was given to us a Harvard Business case study, “Blanchard Importing and Distributing Co., Inc”. The company is a liquor distributer and bottler which, is struggling with inventory management problems. The aim of our work is to help the trainee, Hank Hatch, analyzing the company’s scheduling system and present recommendations with the purpose of solving problems intrinsically related with Inventory management.
Firstly, we are going to calculate the EOQ and ROP quantities based on 1971’s demand, then we compare this values with the ones obtained upon the implementation of the Scheduling system, in 1969, as well as with the scheduling system invented by Bob and Elliot .
We are also going to approach the differences between the formal and the informal systems, choosing the best one for the company and finally present our recommendations which are aimed to solve the detected problems. Economic Order Quantity Model
Operations Managers regularly face with decisions of “How much” or “How many” of something to produce or buy in order to satisfy the internal and external requests for a certain item. The majority of those decisions do not always take into account the cost consequences that would occur. The Economic Order Quantity Model, and also so-called “EOQ Formula”, is often very helpful in guiding managers about the order quantity decision regarding consequences. The EOQ Model was developed by Ford W. Harris in 1913 and it corresponds to the level of inventory that minimizes the total holding costs and ordering costs of the inventory.
Graphic
In other words, the Economic Order Quantity is known as the cost-minimizing order-quantity which takes in consideration the existing tradeoff between ordering cost and storage cost.
Basic assumptions of this Model:
Replenishment occurs instantaneously;
Demand is constant and not stochastic;
There is a fixed setup cost K independent of the order