McLeod Motors Ltd.
The following is a list of questions that may be used as guidelines for analysis. The list is not necessarily exhaustive; therefore feel free to include other aspects that you feel are important.
What action has McLeod taken regarding its production processes and why? Are the expectations reasonable? Have the results been as expected? What is the problem currently facing Sue Reynolds?
Discuss inventory management in general. What functions does inventory serve? What are the costs and benefits of too much or too little inventory? How does inventory management for a retail store differ from that of a production operation? What are several methods that a firm might use to control its inventory? Why should different methods be used for different types of inventory? 3.
Discuss just-in-time (JIT), rationalizing, and outsourcing as methods for reducing inventories. Include both the benefits and potential problems. What factors would need to be considered before you could recommend that a firm adopt or not adopt a JIT system?
Regarding the BN-88-55 motor end shield:
a) Identify each step in the BN-88-55 production process and identify where inventory exists in the system.
b) How long does it take for a batch of BN-88-55s to go through the McLeod manufacturing process (the throughput time)?
c) Estimate the amount of work-in-process inventory for the fifteen end shields produced before the company started making BN-88-55s.
d) How much BN-88-55 work-in-process inventory might the company have now? e) Why might the inventory level have changed?
f) What is the EOQ for BN-88-55?
g) How large must the inventory be? (Or, how small could it be?) What is the best size for this inventory? How do we decide what lot size is best?
What possible solutions are available to Sue Reynolds? What action would you recommend she take, and why?