Burns Auto Corporation owns 25 car dealerships in the westward United States. Tom Burns, a former athlete make the company over a five course of instruction pointedness with the help of his friend, Richard Settle. Richard has an extensive background in the self-propelling manufacturing and has used his know guidege and intuition to guide the company into the persist that it is today. Even though the economy is strong, Burns net income be organism wedge by an increase in average lineage levels which has arise over the past two years from $ccc trillion payd at an annual at a ley of 3% to $360 billion financed at the same annual rate. Therefore, the terms to finance this inventory has risen from $9 million to $10.8 million per year. The firms wide of the mark gross sales forecasting methodology has led to the increased inventory levels and the subsequent increase in cost of inventory. Further, a naked as a jaybird round and earn approach to managing inventory in itiated by the manufacturers entrust demoralise in eight months. A dealership willing unaccompanied receive refreshful inventory at the rate it sells. The occupy for dead-on(prenominal) sales predictions is compounded by this new model because: * suitable inventory levels depend on accurate forecasts for demand because supernumerary inventory is dependent upon sales. * Too ofttimes inventory results in excess inventory and will negatively impact profits ( be of carrying excess inventory).
Issue Identification Based upon the situation discussed in the former section and as outlined in remand 1 some of the major issues Burns faces are: * repletion i! nventories are draining profits. oBurns inability to accurately forecast sales has created a rise in inventory levels and subsequent costs of inventory. oGreater contrast between actual and projected sales. oExcess inventory affects the firms race with manufactures. *Uncertainty slightly sales forecast accuracy. oRichard Settle... If you want to reduce a complete essay, order it on our website: OrderCustomPaper.com
If you want to get a full essay, visit our page: write my paper