Ford Motor Company Inventory Proposal
Any company that delivers goods has many key responsibilities, but a major one is the need to manage its inventory. When a company comes across problems within its inventory, the problem needs to be addressed immediately. If there is a shortage, the company is losing money. If there is a surplus of inventory, the company is throwing money away by having to store un-needed inventory surpluses. Both problems potentially can result in a conflict of either lost value for their products; as well as potentially missing its business objectives, or both. Ford Motor Company will be showcased in the inventory proposal. The Ford Motor Company will face an inventory issue, and later offer a solution through inventory management.
Company Overview Henry Ford founded the company in 1903 in Detroit, Michigan. Ford is the second largest US-based automaker and is also a Fortune 500 company. Throughout the years, Ford has expanded by purchasing other auto-makers. Currently, Ford owns Lincoln and holds stock on Mazda and Aston Martin. Not only does Ford focus on consumer vehicles but also is a major commercial vehicle maker with vans and multiple-sized industrial trucks. Over the years, Ford has been able to expand the offering of multiple types of vehicles. A new focus has been the increased consumer desire for fuel-efficient vehicles. Ford currently offers both hybrid vehicles as well a new all-electric vehicle, the “Focus Electric.” Ford has done a well job at addressing consumer needs. With its current Just-In-Time inventory system, Ford is well on its way to continue its management success in ensuring that it has the steady supply of inventory for the demand of all of its products.
|Month |Year-1 |Year-2 |Year-3 |Year-4 |Average |
|1 |18,000 |45,100 |59,800 |35,500 |39600 |
|2 |19,800 |46,530 |30,740 |51,250 |37080 |
|3 |15,700 |22,100 |47,800 |34,400 |30000 |
|4 |53,600 |41,350 |73,890 |68,000 |59210 |
|5 |83,200 |46,000 |60,200 |68,100 |64375 |
|6 |72,900 |41,800 |55,200 |61,100 |57750 |
|7 |55,200 |39,800 |32,180 |62,300 |47370 |
|8 |57,350 |64,100 |38,600 |66,500 |56637.5 |
|9 |15,400 |47,600 |25,020 |31,400 |29855 |
|10 |27,700 |43,050 |51,300 |36,500 |39637.5 |
|11 |21,400 |39,300 |31,790 |16,800 |27322.5 |
|12 |17,100 |10,300 |31,100 |18,900 |19350 |
|Total | | | | |508188 |
Ford’s entire inventory has been inserted to create the index. By adding each month per year and dividing by the number of years provides the average inventory for that particular month in each year listed. Using the slope-intercept formula to determine the annual increase in inventory allows Ford to see what the average of inventory on hand will be increased to. The formula used is avg. monthly inventory/avg. annual inventory=the index. This information will be useful in planning ahead what inventory to keep on hand and what inventory needs to be used first. The chart below represents Ford’s annual inventory increases.