Grill Rite

Case Study: Grill Rite

Introduction:

Grill Rite is an old-line, seasonal company that started out making wooden matches and then evolved into making electric barbecue grills. They sell five models of grills nationally. It is evident from the case study that the workers of Grill Rite are very loyal. Inventory is handled by a system of four warehouses, one central warehouse and three regional warehouses.

The company stockpiles on purpose to ensure that the workforce has a stable income. On an annual basis, however, the output matches demand.

There has been an increased amount of complaints from regional sales managers about poor customer service. Customers’ orders go unfilled or are late, due to shortages at the regional warehouse which is causing the company to lose sales. The regional warehouse managers began to increase their order sized from the main warehouse in order to maintain larger amounts of safety stock. This has increased inventory holding costs, and not solved the problem of stock-outs. On the other hand the main warehouse feels that their policy is to give preference to filing orders from “actual” customers and not to the regional warehouses. It is evident that the regional warehouses also supply to customers on a regional basis. This inventory issue is costing the company in lost orders and stock holding costs.

Problems:

1. The president’s stance on steady output conflicts with seasonal demand.

2. Having a single, centralized warehouse is lowering the need for safety stock due to random variability in orders from the various regions.

3. Having separate regional warehouses requires each warehouse to have a relatively larger safety stock to guard against variations in demand.

4. The regional warehouse has increased their order size but customer service has not improved.

Solutions:

1. It would be beneficial for Grill Rite to identify a complementary product that would offset seasonal demand for the grilling systems.

2. The demand...