Subassembly inventory costs

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Subassembly inventory costs

Heavy Inventory

New answer on Dec 28, 2019

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MB asked on Dec 28, 2019

How could the cost of inventory be reduced by holding the inventory in raw components instead of circuit boards/subassemblies ? My understanding is that a subassembled part itself is a product of many raw/basic components. Now instead of storing sub assembly, if we store raw components, then the inventory is supposed to increase :(

Any pointers please ?

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Luca

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replied on Dec 28, 2019

BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello Max,

A potential answer to your (fair) point is that the same raw material can be used to produce different circuit boards/subassemblies. In that case you have to storage less material, because you produce on demand what your clients need.

Does it make sense?

Hope it helps,
Luca

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Anonymous A on Apr 01, 2021

Thanks Luca for replying.

Anonymous on Apr 01, 2021

could you also please propose a structured way to brainstorm the solutions recommended in the case? I find the solutions all very valid, but I had difficulty to find a structured way to come to the solutions

Anonymous on Apr 01, 2021

Thanks!