Inventory Management Dilemma at Super Cement

Code : FAC0056

Year :

Industry : Cement

Region : India

Teaching Note:Available

Structured Assignment :Not Available

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Abstract: The case discusses the inventory management issues faced by Super Cement Private Limited (Super Cement). It starts with the dilemma faced by S Lakshmi, founder of the company. Lakshmi was concerned with the rising cost of maintaining inventory, especially limestone, the main raw material used in producing cement. She wanted to optimize the cost of inventory for the company. She was also concerned about the gap between the time the order was placed for limestone and the time it was received. She called Minal, Finance Manager with Super Cement, and asked her to come up with the solution for various issues related to inventory management at Super Cement. The case helps students understand various concepts related to inventory management like how to calculate Economic Order Quantity (EOQ), Modified EOQ, re-order point, and safety stock.

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Pedagogical Objectives:

  • To understand the advantages and disadvantages of holding a large amount of inventory.

  • To understand the concept of EOQ and its calculation.

  • To find out how the optimal order size changes in the presence of discounts of higher lot size.

  • To understand the impact of relaxing the assumptions related to EOQ.

  • To understand and calculate reorder point and safety stock.

    Keywords : Economic Order Quantity; EOQ; Modified EOQ; Re-order point; Safety stock; Inventory; Inventory management; Carrying cost; Material Cost

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