Priveledge Fly

1. Discuss the basic inventory problem confronting this firm.

The basic inventory problem is that there are very little inventory supplies on hand so more often than not, inventory supplies have to be ordered. As a result, the inventory supplies have to be ordered and shipped air freight; which is very expensive.

2. Air freight bills keep growing both in numbers and in total dollar value of freight transported. What are the factors that have contributed to the development of this situation? Do they reflect efficient or inefficient management of supply, inventories, and production in firms such as this one? Discuss.

Air Freight bills keep growing because there isn’t enough inventory on hand to run a complete production; therefore, in order for the company to meet their deadlines they must ship the products via air freight which is very expensive. Since the Supply Manager doesn’t want to have a lot of inventory on hand, she only orders a small amount which results in multiple shipments. In my opinion, this is inefficient management. The company may be saving on its inventory, but they are paying for it in other areas.

3. What should Joan Glass do?

Joan and the Production Manager should sit down and discuss how soon she would need notice to get supplies to the production team without sending it airfreight. Also, Joan needs to keep more inventories on hand. She may not be able to see as high of a decrease in her inventory, but the company as a whole would be more successful if she kept more inventories on hand.

4. Should Glass suggest a materials manager?

Yes, the Materials Manager could help Joan coordinate material activities and the control of total material costs. A materials manager could also help with the purchasing, planning, scheduling, transportation, and warehousing functions.