Inventory Management at Frito Lay
Frito Lay
Question 1:
First of all, Frito lay is a product focused facility meaning it invested much on it’s on capital equipment; this reliance on machines mean’s Frito lay must keep a reliable inventory of MRO. Where as a cabinet shop does not need much MRO compared to Frito Lay.In contrast, a cabine shop or a machine shop keeps high raw materials, wip and final products in inventory since the order basis have variations. The demand for Frito Lay is not by order basis compared to a cabinet shop so it can produce more volume and it has to produce the potato chips efficiently and faster than the production rate of a cabinet or machine shop. In addition, Frito Lay transforms its raw materials into wip faster then into final goods to distribution chain in just 1.4 days compared to a machine shop which is longer and requires more labor.
Question 2: What are the major inventory items at Frito Lay, and how rapidly do they move through the process
The major inventory in Frito Lay is of course the potato which is the raw material. Then comes the corn, the corn meal, the seasonings and then the canola oil. For example, the potatoes arrive through trucks then are loaded for chopping, these potatoes are then seasoned and fried. These inventories are consumed in only 1 shift! These are distributed in just 1.4 days.
Question 3: What are the four types of inventory? Given an example of each at Frito Lay.
The four types of inventories are as follows:
1. Raw Materials – potatoes, corn, seasonings, canola oil. 2. Work in process – cleaned potatoes, seasoned potatoes then cooked potatoes. 3. Finished Goods – bag of chips, cartons of chips. 4. MRO – parts for motors,gears, and all materials necessary to make the equipment running and prevent breakage.
Question 4: How would you rank the dollar investment in each of the four types(from the most investment to the least investment)?
Below ar ethe investments from the most to the least.
1.
Question 1:
First of all, Frito lay is a product focused facility meaning it invested much on it’s on capital equipment; this reliance on machines mean’s Frito lay must keep a reliable inventory of MRO. Where as a cabinet shop does not need much MRO compared to Frito Lay.In contrast, a cabine shop or a machine shop keeps high raw materials, wip and final products in inventory since the order basis have variations. The demand for Frito Lay is not by order basis compared to a cabinet shop so it can produce more volume and it has to produce the potato chips efficiently and faster than the production rate of a cabinet or machine shop. In addition, Frito Lay transforms its raw materials into wip faster then into final goods to distribution chain in just 1.4 days compared to a machine shop which is longer and requires more labor.
Question 2: What are the major inventory items at Frito Lay, and how rapidly do they move through the process
The major inventory in Frito Lay is of course the potato which is the raw material. Then comes the corn, the corn meal, the seasonings and then the canola oil. For example, the potatoes arrive through trucks then are loaded for chopping, these potatoes are then seasoned and fried. These inventories are consumed in only 1 shift! These are distributed in just 1.4 days.
Question 3: What are the four types of inventory? Given an example of each at Frito Lay.
The four types of inventories are as follows:
1. Raw Materials – potatoes, corn, seasonings, canola oil. 2. Work in process – cleaned potatoes, seasoned potatoes then cooked potatoes. 3. Finished Goods – bag of chips, cartons of chips. 4. MRO – parts for motors,gears, and all materials necessary to make the equipment running and prevent breakage.
Question 4: How would you rank the dollar investment in each of the four types(from the most investment to the least investment)?
Below ar ethe investments from the most to the least.
1.