This study centers on a numerical analysis of the inventory situation and an assessment of the replenishment process. However, the stock levels are high, causing a larger than necessary investment in on-hand inventory. Indicators of excess stock include low turnover and high months of supply. Low turnover ratios, with the highest ratio being 0.7, show that on average items stay in inventory for about two years. About 85 percent of SKUs have more than 6 months of supply, with an overall average of over two years worth of supply.
More information is needed to achieve accurate numbers.
Estimates for carrying, holding and stockout costs, lead time and demand need to be collected by management for this purpose. An update of the control system will allow for a decrease in inventory investment. The software in use does not provide sufficient capability to manage EDW appropriately. There are no efficiency reports on the current software, no easy way to export and analyze data and currently no option for creating new reports or answering queries. Additionally, there are many inefficiencies created due to the lack of software capability in performing replenishment process functions.