Case Study #6: Managing Inventory at Frito-Lay

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Case Study #6: Managing Inventory at Frito-Lay Elvin Rodriguez DeVry University Case Study #6: Managing Inventory at Frito-Lay Question #1 The first question that I will be addressing in this case study of Managing Inventory at Frito Lay is as follows: How does the mix of Frito-Lay inventory differ from those of a machine or cabinet shop (a process-focused facility)? According, to the text Frito Lay is a product-focused facility, which produces a high volume of products with only a small variety of chips. This type of facility is a huge investment and in order for it to be efficient it must achieve high utilization. In order for Frito Lay to meet the demands of high utilization they must have very reliable equipment and rigorous schedules. And, in order to have very reliable equipment the company must have inventory on hand of both parts and supplies to be able to maintenance and service the equipment. This type of inventory is known as MRO, which means maintenance, repair, and operating supplies. MRO inventory can be very expensive for the company, but if not able it can cost the company more money to have the machine down and not producing any product. Its raw materials such as potatoes are not stored longer than 7 ½ hours, and these are received daily. Since their raw materials go so fast they quickly become what is known as the (WIP) work-in-process; which means that the product moves fast through the production process, and then quickly moves out the door as a finished product within 1½ shifts. And, then finally to the grocery shelves in less than 1.4 days. As opposed to the process- focused facility that will have a ample amount of raw materials on hand due to unexpected orders of customers. Also, these facilities will have a significant (WIP) work-in-process due to the variance in the organization. These facilities also have less (MRO) maintenance,

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