D Beauty talks Case Study Southern Toro Distributor, I nc. The following convers
ID: 370329 • Letter: D
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D Beauty talks Case Study Southern Toro Distributor, I nc. The following conversation was held between Joe Melaney. general manager and owner of the Toro distributorship in Our Galveston, Texas, and his son Joe Jr 1can trust it. You remember the problems Rylrech had getting it running I they have problems lke that, why should I trust t to tell me how to spend millions of my Joe: I called you in this morning to discuss the future of the company. I feel that you should be involved in more of the decision making around here because you will be taking over the company soon. Roger Kirk, the district sales manager from Toro, will be con- tacting us next week for our spring season order. We will need to order for the entire irrigation line at that Joe Jr You mentioned that RyTech installed the soft ware for us. How did they select the decision ule used in determining the order quantities? JI can't answer that. The consultants that came in told me the best way to determine the order quanti- time. (See Exhibit 1.) As you know, we have been undergoing a num- for ber of changes around the office. One of our major changes was acquiring the RyTech computer system A computer run I recelved this morning combined quantity (EOQ) and a reorder point for every item. They sald this was the best because we have three set order points during the year. I'm comfortable with the order point, but I'm not sure of See Exhibit 2) with the upcoming order date started me thinking about the figures from the new computer. I was think, the EOQ l can tell you how the EOQ was made for ing back on the circumstances that led up to the pur- us They based it on the demand quantties from the chase of the computer a year ago in October 2014 With the way costs are skyrocketing, I had to cut down on my inventory without cutting service. The past four years. (See Exhibit 3.) RyTech said that they did not see the need for any additional measures They also said it would work very smoothly since it Ryfech representative said he could cut our inven- wasn't necessary to change the E0o once i was in. tory level by 30 percent, which sounded good As I said earlier. Im not sure of the EOQ You know for the market in enough for me. So I contracted with RyTech for the how ve depended upon my gut fee the past I've always ordered parts based on past us Max, our irrigation manager, swears by the age. Then numbers he gets out for order quantities. When this y nmanager, swears by theage. Then I adjust the numbers according to how many golf coursesi expect to be buit or modified EXHIBIT 1 Irrigation Products, Inc., current inventorics, Ocober 15. 2015 ($000) Current Inventory Current Inventory FY 2015 Sales s000) controlers series 150 +8 controllers series 123-8+11 controllers series 176-11+23 valves series 216Explanation / Answer
1. Recommendation to Joe jr are:
2. Inventory management is important to maintain right stock in the warehouse, because we don't want to loose the sale because be don't have enough inventory in our warehouse house. Inventory management for southern Toro distrbutorship is very much important because somewhere thier inventory management is going wrong, for some products they are loosing thier sale due to shortage of commodity and some commodity are overstock. E.g shortage of series 230 1- inch which is in high demand but they always go shortage of this.
Inventory which in not always in demand but seasonally in demand like irrigation product which are more in demand in irrigation season should be ordered more during irrigation season n rest of the demand their inventory should be cut down. Spare part which are always high in demand and they always at shortage of this product should be increased in inventory and product which are rare in demand should be cut down. Once they should overview thier sales and inventory before reordering the inventory.
3.the current inventory management of southern Toro distrbutorship is highly unmanaged, due to which they are loosing thier sales as well as loyal customer. They should change they currently reordering method of inventory. Currently Mr. Joe is following order point method for rendering inventory which in today's senerios is not working well. Once he should try of economic order quantity method of inventory reordering. Because it is the best way to manage inventory in most economic way. Which save your money plus avoid overstock of goods in the warehouse.
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