Wilkins, a Zurn Company: Aggregate Production Planning (Term Paper Sample)

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Wilkins, a Zurn Company: Aggregate Production Planning
Question 4:
Safety Stock
Safety Stock Inventory = zLtƠ
Where z = number of standard deviation, which is 2.33 for a 99% service level.
L (lead time) = 14days
ƠQ1 = 1,877, ƠQ2 = 3,361, ƠQ3 = 3,851, ƠQ4 = 8,154
The company also needs to think through having some safety stock for times when demand levels are in elevation. To guarantee there are no depletion in their inventory of the PVB product family, Wilkins should have Q1 = 1,715 safety stock units, Q2 = 3,072 units, Q3 = 3,520 units, and Q4 = 7,452 units. This would help Wilkins in avoiding exorbitant stock outs, and permit the company to have some opportunity for error to respond to emergencies. With these numbers, it would sanction the company to have an indistinct picture of their costs, and let them amend as a result. In the case of Wilkins, experiencing a stock out, it may possibly be 50-100% of the items cost, hence, should avoid this situation at all costs.
Question 5:
The chase strategy had the lowest cost and most reactive strategy to deviations in demand. The strategy was almost equivalent to safety stock inventory reducing the same by 92%. The cons of this strategy are that it has a poor outcome on employees’ drive, has firm low-level inventory difficulties, and it does not allow for termination of employees. In addition, it was evident that the PVB cell’s volume could not employ the chase strategy without first providing alternatives or enhancing the machines. The mixed and chase strategies are similar in both costs and analysis.
On the evaluation of level strategy, Connors was in preference of this as compared to the other two. Employing this strategy, it reduced the inventory by 34% while still maintaining a similar number of employees each quarter. Though it may seem appealing on the surface, there were a few disadvantages to this strategy. The approach would need Wilkins to work with excessive inventory levels. The strategy also does not allow the company to benefit from any drop in material cost. Furthermore, the plan has a shortcoming in the flexibility required to meet changing demand. Finally, the level strategy is costly in comparison to the others; as the simplest to implement, it is not cost-effective. Chase strategy was the most impressive of the three.
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