Mcleod Motors Ltd

Answer 1

As regard the production process, the company had decided to produce a different end shield as the new system would reduce the number of end shields to be produced from 36 earlier to 5 of the new shields by making some minor changes in the production process.

Based on the primary reports and the significant reduction of the end shields used as one of the components and also reduction in the cost of the end shields, the expectations of McLeod can be said to be reasonable.

The new production process was initiated so as to reduce the cost of the end shields and also shorten the number of end shields. Though the numbers of end shield have decreased but the costs have gone up due to the extra cost incurred for storage of the excess inventory produced.

The current problem faced by Sue Reynolds was the cost of manufacturing and inventory cost. McLeod motors were holding huge inventories in hand which in turn lead to the huge storage cost. Most of the warehouse space was occupied in storing those inventories and also the machines were busy.

Answer 2

Inventory management is the program that helps the management in controlling payments, sales and purchases. It is the process that helps in estimating the requirement of inventory within the business, and provides the techniques in adding the new stock and the time when the stock will be utilized in the organization. Inventory management controls the operating costs of the company and provides as the source of information to the inventory management software and tools. It specifies about what should be the size and the location of the inventory in the organization. It also helps in controlling the inventory valuation, physical inventory, the lead time required in purchasing the inventory, return of defective goods etc.

A business needs inventory to maintain the smooth flow of the operations and helps in the economic purchase order size. It helps in segregating the different parts of the production process. When...