Question

research paper:
each student will be responsible for writing an argumentative research paper discussion a topic that is relevant to the field of management ( The table of contents for our book is a great place to start). this paper will be a minimum of 8 complete papers and maximum of 10.

Answer 1

A Case Study of Inventory Management in a Manufacturing Company in China.

ABSTRACT: In this paper, we focus on inventory management in a manufacturing company in China. This study aims to identify the key factors that influence inventory management practices, investigate efficient and effective inventory management approaches, and examine the impact of supplier cooperation on supply chain improvement. A case study approach is used to identify the key factors that influence inventory management in a factory. Efficient and effective inventory management practices are derived from the case study and may provide practical guidance for foreign manufacturers in China. This study provides a valuable tool for identifying the key factors in inventory management which can be applied to similar problems encountered in actual manufactories.

Introduction The traditional concept of supply chain management is concerned with utilization and optimization of the resources within a firm. The emphasis now, however, is on the relationships between trading partners. Currently, supply chain management is defined as a network of connected and interdependent organizations mutually and cooperatively working together to control, manage, and improve the flow of materials and information from suppliers to end users (Monczka et al., 2015). With the development of supply chain management, many approaches have been introduced during the last decade. The most common approaches are material requirements planning (MRP), flexible manufacturing systems (FMS), total quality management (TQM), and just-in-time (JIT) methods (Christopher, 2016). Inventory management is the main factor in supply chain management. It involves a balance between customer service, or product availability, and the cost of inventory (Ballou, 1998). The concept that high inventories are wasteful has been widely accepted (Christopher, 2016), and firms now concentrate on improving inventory efficiency. This paper proposes to enrich the study of inventory management through a case study. It suggests a number of inventory management strategies that use supply contract, safety stock model, vendor managed inventory (VMI), and postponement to reduce the overall cost.

Safety stocks are widely used to defend uncertainty, improve service level, and increase the stability in planning and controlling systems (De Bodt and Wassenhove, 1983). Howard (1984) pointed out that to manage the opportunity cost of inventory control, firms must maintain a level of safety stock that balances the loss of sales and customer goodwill with the cost of carrying inventory. The complexity associated with this decision stems from the fact that both daily demand from customers and lead time from suppliers may vary. Thus, the greater the variability, the larger the safety stock needed. Beyond the quantitative method, which mainly focuses on optimizing inventory levels in departments, many manufacturers have turned their attention to new conceptual ideas about supply chain management, such as VMI and postponement which emphasize collaboration and sharing information with suppliers and customers, utilization of information technology, to reduce inventory and optimization of the whole supply chain. VMI model is designed as a powerful tool to deal with supply chain management from which suppliers can make better decisions for inventory replenishment. The advantages of using VMI have been extolled by several authors. Waller et al. (1999) pointed out that the main advantages of VMI are cost savings and customer service levels, which can be improved on both sides. Fox (1996) and Williams (2000) suggested that these advantages can improve the level of service, reduce uncertainty in demand, and save costs.

Research design Case study research method is applied in this study. Both quantitative and qualitative inventory management methods have been examined in the case analysis. Quantitative methods employ mathematical models to manage inventory, while qualitative methods use conceptual ideas from supply chain management to reduce inventory. It is expected to arrive at a deep understanding of how inventory management is done, and what factors influence efficiency and effectiveness of inventory management to reduce cost, improve service, and enhance competitive advantage.

Data collection The data used in this study are collected by interviewing warehouse managers and procurement managers who are involved in inventory management. Other data are collected by studying company documentation, such as production schedules, inventory reports, production reports, ERP databases, and public media such as the Internet and newspapers.

Sample The selected manufacturing company has a peak season when inventory is more difficult to control. We, therefore, selected the data from the most recent periods including both low season (July to September 2015) and peak season (October to December 2015).

Procedures First, we collected the annual reports of our sample firm and developed a profile of the inventory management style of the company we have chosen. Second, we interviewed the related staff and managers about the details of inventory management. Third, we collected data from inventory lists, production schedules, database of ERP and so forth. We selected the representative period and group of data to analyze.

Hypothesis The study assumes that the safety stock model is based on daily demand distributed normally, and so the following hypotheses are used to test whether the data (daily demand for raw materials) are distributed normally or not. H0: The daily demand for raw material is distributed normally. H1: The daily demand for raw material is not distributed normally. 3.7 Specific statistical test and verification The nature of the dependent variable (daily demand) is interval and normal, so the Shapiro-Wilk Normality test is applied to test if the data for safety stock model are distributed normally. Regarding the verification process, under the condition that the confidence interval for the mean is 95%, if the parameter’s significance level is greater than 0.05, then the hypothesis H0 is accepted, meaning that the data are distributed normally. If it is less than 0.05, then H0 is rejected, and H1 is accepted.

Case description This case study is developed from actual data. However, in order to protect the interests of the company so that the company identity remains anonymous, we use LT China (pseudonym) throughout the study. LT China is one of the world's largest manufacturers producing residential basketball equipment, polyethylene tables and chairs, and outdoor storage sheds. In 2007, LT China built plastics manufacturing facility and assembly plant in a southern city in China.

1 Current strategy of inventory management Both centralized and decentralized strategies are currently used for purchasing raw materials in LT China. Three types of materials are acquired: POLY bead, steel frame, and packaging materials. Different strategies have been used for inventory control in terms of the actual situation of those materials. One of the important raw materials, POLY bead, is purchased and controlled by the headquarters in the US, as all the panels and boards produced by LT China's manufactories are made of the same type of POLY bead. As a result, the company can achieve economies of scale by using a centralized procurement strategy. Other components, such as steel frame and packaging materials, are controlled and purchased by the local procurement department. Most of those components and packaging are customized and changed frequently by the customers, so implementing a decentralized strategy can quicken the response.

Operations Generally, LT China updates the production schedule and sends it to suppliers every two days, and confirms with suppliers one day before production. After receiving the production schedule, suppliers can prepare for production or adjust the production in terms of the updated schedule for LT China and keep the steel frame in the warehouse. The quality controllers assigned by LT China will then inspect the product, after which the frame is labeled with a time when it will be delivered and stored in LT China’s warehouse. Generally, the frame will arrive at LT China's assembly workshop at 30 minutes before assembly. For example, if the assembly time of two products is at 10:00 am and 2:30 pm, the frame should arrive at LT China at 9:30 am and 2:00 pm, respectively i.e. just-in-time delivery. However, one of the crucial problems during VMI implementing is that sometimes an urgent order requests extra frame is received. Since the steel frame cannot be produced within one or two days, the supplier tries to keep a strategic inventory of raw frame and utilizes a postponement policy to deal with the urgency. There are 3 types of frames in more than 20 kinds of colors. Suppliers keep a strategic inventory of the 3 types of raw frames but do not colour-spray them. Since spraying takes little time, and so customization and quick responses are maintained. With this arrangement, LT China can benefit from when there is no inventory of steel frame which may take up large space of warehouse and other resources. It helps LT China improve the process of production and at the same time VMI helps suppliers improve production technology and inventory management, such as postponement production. However, suppliers must keep higher inventories of steel frame or keep them for a longer time before consignment in order to meet the requirement of just-in-time delivery. Suppliers provide, in effect, a warehousing service for LT China and so cannot optimize the efficiency of whole supply chain completely.

Postponement As discussed earlier, packaging can present considerable optimization problems. Some companies, such as Walmart and Home Depot, have largely fixed requirements for size and shape of packaging boxes. However, some details do change such as the PO (production order) number, the destination, the production date etc., and in such cases postponement production needs to be considered. LT China requests suppliers to produce a general box with blank columns for PO number, destination etc. After product packaging, stickers giving information will be printed per the requirement of customers and affixed in the corresponding columns.

Concluding remarks In this study, we focus on optimizing inventory management in the improvement of supply chain management. Reducing inventory is considered one of the most important aspects of inventory management. But in practice, low inventory level is not always a good solution.

Manufacturers need to maintain the right amount of inventory at the right level. It is clear that the ultimate purpose of reducing inventory levels is to reduce cost and increase profit through optimization of supply chain efficiencies. Reducing inventory is the main task of inventory management. If suppliers do not guarantee the availability of a requested quantity of raw materials (such as some scarce natural resource), or the price changes regularly (usually when it is increased), then keeping strategic inventories is necessary. Today, high inventory levels still happen at many manufacturers, even well-known ones. For example, in LT China, some managers in material management feel that implementing advanced inventory management for some materials is unnecessary  because :

1) warehouse costa are cheap in mainland China;

2) postponement payment to suppliers can make inventory take up less capital;

3) the lifecycle and preservation time of furniture and sport equipment are longer than those for electronic products and fast food etc.

Finally the following recommendations are made:

1) Cultivate or hire more professionals in supply chain management, and spread the concept of SCM among staff.

2) Establish a strategic partnership with suppliers and customers for long-term development.

3) Improve IT infrastructure to provide a better platform for collaboration among partners in the retailing industry.

4) Improve company regulations and standardize operational processes to reduce man-made mistakes and prevent administrative overload and corrupt practices.