Sandusky Case Study Answers

1. What could be the main sources of the inventory mess created by Sandusky?
“Sandusky is managed by so called earn and turn concept.” (Min, 2015, p. 171) This method of inventory analysis only measure profitability as whole not individual products. Which is the root of their inventory issue. Causing production to produce unwanted goods. Leading to excessive inventory. ““I think Earns & Turns is a very useful analysis tool. It’s a great measure of the profitability of a product. Only thing I would add is that you still must look at products from multiple perspectives. The high-volume core of your product line should have high ratios – more like 200. B items will have a lower ratio, but might still be just as important to your line – since
171) Missing elements of new product cost a serve impact total inventories cost. Considering their warehouse is already full. It would change the overall value of the warehousing, production and other inventory carrying cost. Also they are missing the inventory risks, such as obsolescence, and damaged inventory cost. Often the good were damaged due to the needing to be in temperature controlled warehouses and were often left outside, being damaged. The ordering cost of new products are also not considered in the calculation. This is the reason the Sandusky’s profits and cost savings never met there estimated
How would you change the current inventory management practices (including inventory classification schemes) to ease storage space problems?
The current inventory management practice that are in place at Sandusky earn and turn method is obsolete. I would change the current inventory management methods to EOQ system to push the independent demand of the wine that already taking up product space in the warehouse. “Sandusky conducted a quick analysis of its inventories. Their analysis reveals that inventories are recorded separately for every single item in the inventory files.” (Min, 2015, p. 171). Since there are already inventory files for every single item. But the financial records are mixed together. An ABC inventory analysis can help determine the value of the over stocked inventory. They can take those items and push the overcrowded inventory to make room in the storage room. Since they need to make room they can also offer quantity and freight discounts for larger volume of sales. Making it easier to sale the products instead of writing the inventory off, and losing potential profit and products due to the limited