Murthy, vice president of manufacturing for ToysPlus, Inc., finished reading the weekly production report for the week ended January 27, 2012. Inventories were up once again, and service levels were lower than expected. Murthy wondered why these problems could not be solved once and for all. Last year he had installed a new IBM production and inventory control system on the company’s mainframe computer. While the system drastically reduced inventories and improved service levels at first, things had gotten worse over the last few months.
Murthy took the report and walked to Asha’s office next door. Asha had received her M.B.A a few years ago from I.I.M. Bangalore and was now in charge of …show more content…
Purchasing does not always buy the exact number of parts that are ordered by the production control department. Adjustments are made to take advantage of price breaks from suppliers or to achieve full-truckload shipments. As a result, some additional parts might be purchased in order to reduce purchasing costs. Also, suppliers do not always ship the component parts when promised. As a result, ToysPlus carries safety stock inventory to protect the master production schedule and to keep the assembly lines running, no matter what. About one week of safety stock is carried to protect for late supplier deliveries. Management has mandated that the assembly lines will not shut down.
Profit and Loss (in Rs.) Year Ending December 31, 2011
Balance Sheet (in Rs.) As of December 31, 2011