Rough Draft

n on past actions of the company to correct inventory management and their results, andconsidering the market leadership opportunity, how inventory management approach can be madebetter is explained by evaluating different alternatives from different aspects. In the first part, criticalPOM issues are mentioned, following that these problems are analyzed. In the third part, alternativeoptions are listed and then they are evaluated. Finally, considering the trade-offs of these evaluations, aconclusion is made. And it must be mentioned that, throughout the case, related points are referenced tothe case text and lecture notes with corresponding page and paragraph numbers.

II.

CRITICAL POM ISSUES

As mentioned in the text, there is an identified increasing trend in the balances of inventorylevels. (Page 1, para. 2) For a growing company in a growing market, this high inventory level, in otherwords tied up money in the inventory, creates an obstacle for this company to use this extra capital onother areas, such as expansion to international markets. Also, as mentioned, debt to capital ratioexceeded the target level of 40% and with the same approach this increase of this ratio also jeopardizes

the company’s funding expansion plans to international markets. Although, there are many other POM

issues are found in the text, these mentioned two were the most critical ones and it is thought that if they are solved the other problems will be solved spontaneously.

III.

ANALYSIS OF THE CRITICAL POM ISSUES

In the last part, it is mentioned that average inventory level is high enough to jeopardize

company’s future plans. Therefore, main reasons behind this problem should be analyzed. First of

all,company has a policy related to 99% fill rate, which is also open to discussion considering the marketaverage of 92%, and warehouse managers are usually exceed even this limit and they are keeping moreinventory than necessary (Page 4, para. 5). Seco

ndly, company has a...