Gap Analysis: Kuiper Leda
Regardless of how successful a business is, if supplies do not keep up with demands that business will have a difficult time to make profits without the needed sales. The reverse is also true when the supplies grossly exceed demands as the excess inventory would result in tied up money that could be used for other projects or business plans. Therefore, the art of making the most of the inventory is to have the products available when and where they are needed.
Kuiper Leda (KL), operated out of the Republic of Novamia, is a manufacturer of electronic components, especially in the production of the Electronic Control Units (ECUs) and the sensors for the automotive industry (University of Phoenix, 2009). For the past six months, KL has introduced the new product line of producing the Radio Frequency Identification Devices (RFIDs) (University of Phoenix, 2009). KL has been in business for the past 10 years with an initial investment of $100 million; and its revenue has reached $400 million this year (University of Phoenix, 2009).
Issue and Opportunity Identification
KL sources the components of its ECUs and RFIDs to many outside suppliers. As KL relies on its suppliers to supply the raw materials, it needs to control its inventory tightly to ensure a smooth production of its electronic components. However, according to Chase, Jacobs, and Aquilano (2005), "All inventory systems are plagued by two major problems: maintaining adequate control over each inventory item and ensuring that accurate records of stock on hand are kept" (p. 609). The three simple inventory control systems widely used are: optional replenishment system, two-bin system, and one-bin system (Chase, et al., 2005). Maintaining inventory by the methods of counting, placing orders, receiving materials and such takes up a great deal of time and resources; and because not all parts in the inventory is of equal value, the ABC inventory planning system would...