Dell Computer Inventory Policies

342 Words2 Pages
Assignment: After reading through the chapter, consider a local retailer and analyze its inventory policy (as best you can). Make some determination of the retailer’s policy on inventory levels, stock-outs, backorders, and safety stock. Provide reasons why you chose those policies for that particular retailer. Critical Thinking Question Assignment Response: For my company, I chose Dell Computer Corporation. Per the Inventory Management Review website 1.e Dell is frequently held up as a model of low inventory levels. The following shows just how well Dell turns over their inventory: Dell’s Inventory Turnover Data Year Inventory Turnover Week's Inventory 1992 4.79 10.856 1993 5.16 10.078 1994 9.4 5.532 1995 9.8 5.306 1996 24.2 2.149 1997 41.7 1.247 1998 52.40 0.992 1999 52.40 0.992 2000 51.4 1.012 2001 63.50 .819 As can be seen from the above table, Dell has gone from an almost 11 week inventory to less than one week’s worth of capacity. Dell’s CEO put the mentality of this turn over very succinctly in an interview:1.e “The longer you keep it the faster it deteriorates -- you can literally see the stuff rot," he says. "Because of their short product lifecycles, computer components depreciate anywhere from a half to a full point a week. Cutting inventory is not just a nice thing to do. It's a financial imperative." This type of thinking has kept Dell on the cutting edge of sales and profitability. As stated in the article, a computer loses approximately 1% of their value every
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