case study-v (game)

8/3/2019 Case Study-V (Game)

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CASE STUDY V

A BUSINESS GAME IN INVENTORY MANAGEMENT

PERFECT PRODUCTS COMPANY, Chennai, are manufacturers of cosmetic

goods. Their annual purchase is of the order of 360 lakhs rupees. They carry an

inventory of about 2,802 items. One of the items under study here, is Packing

Cases made of deal wood according to drawing no. PC-144-332-5.

The packing cases are supplied by Malabar Trading Company located in Calicut,

Kerala. Their supplies are by lorry loads of 100 cases.

The following is the COST DATA

Cost per Case Rs.500/- (including taxes, transport cost, etc.)Cost of Holding 2 paise per case per week

Cost of Ordering Rs.5.00 per order

Cost of Stock Out Rs.25.00 per case per week

CONSUMPTION

The average consumption during last year was 500 cases per eek. They estimate

this years average consumption figure at 600 cases per week with a fluctuation of

(normal distribution) + 150 cases per eek during normal periods. They expect peakconsumption of 900 cases 150 cases per eek during 8th, 9th and 10th weeks. There

is also a lean period during 21st, 22nd and 23rd weeks, here the average consumption

would be 200 50 cases. During the 14th weeks, there is no consumption as the

plant is shut don.

PROCUREMENT

The procurement period is normally 3 weeks and may vary by one week. Orders

should be placed in multiples of 100 cases which could form one lorry load.

There is an opening stock of 2,100 cases. The withdrawals by the packing

department is in units of 10 cases.

With the above data, you are expected to formulate your on inventory policies and

take decisions on Safety Stocks, purchase order quantities and supply batch

quantities.


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You ill be given the consumption figures and receipt of orders, week by eek. Use

the enclosed forms for your ordering and make stores bin-card entries. After

playing the game for 26 weeks analyse your performance by finding out :

1. Average inventory level and average inventory cost.

2. Average stocks held as a percentage of total consumption and in weeks.

3. Your performance (total of stock holding cost, stock out cost, ordering

cost and difference between total purchase cost and total consumption).

4. Turn over.

Finally, compare your inventory policies and consequent performance with others.


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ORDERING FOLLOW-UP FORM

PRODUCT : Packing Cases Avg. Consumption : 600 150 cases

Dwg. No.: PC 144-332-5 Peak Period : 8

th

, 9

th

& 10

th

weeks :900 150 cases

Procurement Period : 3 1 week

Lean Period : 21st, 22nd & 23rd weeks :

Lorry Load : 100 cases 200 50 cases

Shut Down : 14th week

Buffer Stocks : Re-order Level :

Maximum : Ordering Period :

Minimum Osrdering Quantity : (EOQ = )

PURCHASE ORDER DELIVERY Bal. On

OrderNo. Qty. Cmpl. No. Qty. Recd.

1

2

3

4

5

6

78

9

10

11

12

13

14

15

1617

18

19

20

21

22


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23

24

25

26

Policy on :(i) Ordering : (ii) Safety Stocks :

STORES BIN CARD

Week

No.

Recd. Issue Bal.

In

Stock

Total Week

No.

Recd. Issue Bal.

In

Stock

Total

O.S. B.F.

1 142 15

3 16

4 17

5 18

6 19

7 20

8 21

9 22

10 2311 24

12 25

13 26

C.O. Total

i. Stock holding cost = Avg. Inv. (Nos.) =

ii. Ordering Cost = Avg. Inv. (Cost) =

iii. Stock out Cost = Avg. Inv. (Weeks) =iv. (Recd. Consn.) = Avg. Inv. (%) =

Total Rs. =

case study-v (game)

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