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Get Full Essay Get access to this section to get all help you need with your essay and educational issues. As a result, inventory management is becoming inefficient. This is resulting in warehouses some of which are under-stocked and some of which are overstocked. Therefore the management of the company should conduct some sort of risk pooling in order to reduce some of the uncertainty.
Once the uncertainty has been reduced, the company will be in a better position to enhance the level of inventory turnover. Fortunately, the company maintains only two product categories which are similar. Therefore, in designing a new logistics system, Able should consider one of three strategies in risk pooling: The challenge in front of the management is to reduce the level of demand uncertainty.
The high level of uncertainty is resulting from the fact that the customers are placing their orders in small lots.
Therefore Able should consider implementing the Just-in-time management philosophy. This will enable Favored Blend to design a production scheduling system which will enhance the level of inventory and thus minimize carrying costs.
However the important consideration for Able is to design a production scheduling system that would be compatible with a pull system. Therefore some sort of framework for demand forecasting would have to be implemented. This would facilitate the implementation of the JIT philosophy.
Question 2 There is sufficient similarity among logistics system to enable Able Management Consultants to manage this project effectively. In this respect it must be mentioned that Favored Blend maintained an elaborate logistics system.
However since the company had no way of forecasting demand, the logistics system was proving to be ineffective. Therefore the source of the problem lay in demand forecasting. Addressing this problem entailed the application of methodologies which were common across different industries.
Once the problem of demand forecasting had been solved, Able Management Consultants would have to address the issue of production scheduling. The methodologies available to address this problem were also common across different industries.
The company operated in a high-risk business because of the high level of uncertainty in demand. Therefore risk pooling strategies would have to be implemented in order to reduce this uncertainty. These risk pooling strategies could be made applicable unchanged to Favored Blend.
All logistics systems had these components and therefore Able Management Consultants would be able to apply them to Favored Blend as well. As a result the company was forced to implement a cross hauling strategy between warehouses.
Because marketing and distribution departments were not making any efforts to forecast demand effectively, the manufacturing system was following a push strategy. However the push strategy was no longer effective because customers were placing increasingly smaller orders over shorter periods of time.Perfect for the aficionados looking for a stronger coffee with a rich flavor.
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