Question

Currently, L.I. LTD offers about 80 different models in its standard printer catalogue. The number of references increases during the industrial process according to the diagram below. Final assembly Plastic Sub- assemblies Stock raw materials FGI Molding 4 systems 10 combinations of accessories and options 2 sizes 1 couleur This curve shows how the variety increases at each stage of the process (current catalogue) The difficulty facing L.I. LTD is the following. Marketing studies show that for years to come it will be necessary to offer more variety in standard printers: Customers want a range of standard printers In the case of external appearance, offer about ten colors at the level of the outer plastic shells. Offering greater diversity in the combination of accessories In total, this would correspond to multiply by a factor of the order of 100 the total number of standard references proposed on the market At the same time, for this range of standard printers, customer-perceived time-outs must not increase significantly. However, it is not possible to keep more references of finished products in stock than at the present time, due to the excessive inventory costs that this would cause. What solution would you implement to offer a wider range of standard printers to customers, while respecting all of these constraints?

Answer 1

I would suggest the company to apply a new strategy which is based on Pull-production system rather than a traditional Push- based system. This means, the printers must be made as per customer or market demand and not as per preference or schedule pre-decided by the manufacturer. This will help the business to reduce it's inventory level and the related costs incurred due to excessive inventory such as space costs, material costs, risk costs, labor costs, etc. In addition to this, Pull-based systems have proven to ensure on-time delivery, optimized cost consumption, reduced errors and defects and improve labor productivity. Also, for running items , it can maintain a minimum level of inventory by referring to demand v/s supply analysis.