Inventory Proposal Qrb/501

Inventory Proposal - Team A
QRB/501

Inventory Proposal - Team A
Team A has chosen Costco as its company to analyze because each of the team members is familiar with Costco. Costco is a retail wholesaler warehouse that was founded in 1983 in Issaquah, Washington. Costco cuts out the “middle man” by selling its customers items in bulk at low prices. In our study, Costco has a problem with its inventory that needs to be resolved. Team A will be using the Summer Historical Inventory Data provided by University of Phoenix and interpreting the numbers as if it were Costco’s data. Scenarios developed are purely for the educational purposes of Team A’s work. Raw Data | | | | | | | | | Month | Year 1 | Year 2 | Year 3 | Year 4 | Total | Mean | Index | July | 18000 | 45100 | 59800 | 35500 | 158400 | 39600 | 0.935 | Aug | 19800 | 46530 | 30740 | 51250 | 148320 | 37080 | 0.876 | Sept | 15700 | 22100 | 47800 | 34400 | 120000 | 30000 | 0.708 | Oct | 53600 | 41350 | 73890 | 68000 | 236840 | 59210 | 1.398 | Nov | 83200 | 46000 | 60200 | 68100 | 257500 | 64375 | 1.52 | Dec | 72900 | 41800 | 55200 | 61100 | 231000 | 57750 | 1.364 | Jan | 55200 | 39800 | 32180 | 62300 | 189480 | 47370 | 1.119 | Feb | 57350 | 64100 | 38600 | 66500 | 226550 | 56637.5 | 1.337 | Mar | 15400 | 47600 | 25020 | 31400 | 119420 | 29855 | 0.705 | April | 27700 | 43050 | 51300 | 36500 | 158550 | 39637.5 | 0.936 | May | 21400 | 39300 | 31790 | 16800 | 109290 | 27322.5 | 0.645 | June | 17100 | 10300 | 31100 | 18900 | 77400 | 19350 | 0.457 | Inventory Management Problem The problem is two-fold in that Costco has too-narrowly defined its performance measures, and it does not encompass all of the aspects and factors that the company should use to determine its seasonal inventory. In addition the company’s managers have caused Costco to become the victim of the “bullwhip effect.” This means they anticipated heavy demand during one season but were left with

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