Heavy Inventory

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Topics:
Operations strategy
Heavy Inventory Heavy Inventory
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Problem Definition

As a B2B firm we manufacture test equipment for electronics firms. The revenue per product ranges from $500 to $100,000 as this is a high complexity business.

On an average we hold 200 days of inventory which we would like to bring down to 100. What do you think we should do?

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Question on the case: Heavy Inventory

Subassembly inventory costs

Heavy Inventory
Most recent answer on Dec 28, 2019
<p>How could the<strong> cost of inventory be reduced </strong>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 :(</p> <p>Any pointers please ?</p>
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 de ... (read entire answer)
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on Dec 28, 2019
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