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Inventory Plan at Varun Water Technologies

CASELET, OPERATIONS MANAGEMENT
ET Cases, 2 pages

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Inventory Plan at Varun Water Technologies

 

Varun Water Technologies (Pvt.) Ltd. (VWT), located in Bangalore has been a successful wholesale distributor of water purifiers and accessories. Established in  2010 by Aditya Varun (Varun), the company distributed a wide variety of water purifiers (Magicpure, Oxipure, AquaClean, etc.). The most popular model and major source of revenue to the company, was Magicpure. VWT received all the models from a single manufacturer in China and shipment took 4 weeks from the time an order was placed. VWT was operating and catering primarily in the three southern states of India – Tamil Nadu, Andhra Pradesh and Karnataka. VWT supplied to retail outlets that were located within a 400-mile radius of its distribution center. These retail outlets received the products from VWT within two days of placing an order with the distribution center, provided that the stock was available. However, if an order was not fulfilled by the company, the retailers arranged to get their shipment from other distributors, which would be a loss for VWT. Though initially, Varun did not bother about it, in the recent past he started losing lot of business which was affecting the company in a big way.............

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Inventory Plan at Varun Water Technologies

 

Prerequisite Conceptual Understanding

  • • Jay Heizer, et al., “Chapter 11: Inventory Management”, Operations Management, 9th Edition, Pearson Education, 2008

 

Synopsis

This caselet enables a discussion on the concept of Economic Order Quantity (EOQ) in Operations Management. Varun Water Technologies (P) Ltd. (VWT), located in Bangalore, a successful wholesale distributor of water purifiers and accessories had been purchasing the purifiers from a single manufacturer in China. Within two days of receipt of orders, the products were delivered to the retailers based on the stock availability. In case of stock unavailability, the retailers approached other distributors for the products resulting as a loss of business for VWT. To put a full stop to this problem the founder of the company Aditya Varun (Varun), wanted to implement and follow an effective inventory plan. However, Varun was still in a dilemma as to how much to order and when to order.

Expected Learning Outcomes

  • • Economic order quantity and its use for independent inventory demand
  • • Reorder point and safety stock
  • • How EOQ will be useful for VWT
  • • Various costs involved in managing inventory

 

Assignment Questions

  • I. Develop an inventory plan to avoid business loss at VWT.
  • II. Discuss Reorder Point and total costs.
  • III. Discuss how to address demand that is not at the level of the planning horizon?

 

Teaching Plan

The Teaching Note follows the specific Teaching Plan [Annexure (TN)-I]..................

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Abstract


This caselet enables a discussion on the concept of Economic Order Quantity (EOQ) in Operations Management. Varun Water Technologies (P) Ltd. (VWT), located in Bangalore, a successful wholesale distributor of water purifiers and accessories had been purchasing the purifiers from a single manufacturer in China. Within two days of receipt of orders, the products were delivered to the retailers based on the stock availability. In case of stock unavailability, the retailers approached other distributors for the products resulting as a loss of business for VWT. To put a full stop to this problem the founder of the company Aditya Varun (Varun), wanted to implement and follow an effective inventory plan. However, Varun was still in a dilemma as to how much to order and when to order.



Pedagogical Objectives

  • To discuss and understand economic order quantity and its use for independent inventory demand
  • To discuss and compute reorder point and safety stock
  • To elucidate how EOQ will be useful for VWT
  • To understand the various costs involved in managing inventory



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- Caselet
- Teaching Note (**ONLY for Academicians)
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