Frito Lay Inventory

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Managing Inventory at Frito - Lay Question 1: How does the mix of Frito – Lay’s inventory differ from those at a machine or cabinet shop? (A process – focused facility)? The mix of Frito – Lay’s inventory differ from those at a machine or cabinet shop because it is a product focused facility and invested a lot on its’ capital equipment. This means Frito – Lay must keep a reliable inventory of maintenance, repair and operating supplies (MRO) whereas the cabinet shop does not need high upkeep of MRO compared to Frito – Lay. Cabinet or machine shop keeps high volume of raw materials, work – in – progress (WIP) and final products in inventory as they have variations in their order basis. This is different with Frito – Lay where their…show more content…
The major inventory items in Frito Lay are corn meal, corn, potatoes, oil and seasoning. The potatoes arrive through trucks everyday and consumed in one shift. The entire storage holds the potatoes for 7 and ½ hours only. The oil, corn meal and seasoning averages 4 ½ days, 4 days and 7 days respectively. The finished products move from production to distribution chain in less than 1.4 days. Question 3: What are the four types of inventory? Given an example of each at Frito – Lay. The four types of inventories are as per below: 1. Raw Materials – potatoes, corn, seasonings and oil. 2. Work in process – cleaned potatoes, seasoned potatoes then cooked potatoes. 3. Finished Goods – bag of chips, cartons of chips. 4. MRO – parts for motors, gears, and all materials necessary to make the equipment running and prevent breakage. Question 4: How would you rank the dollar investment in each of the four types (from the most investment to the least investment)? Least – WIP, there is virtually no WIP because it is only one shift worth that is moving rapidly through the…show more content…
Next to most – Finished goods because it has several days of inventory with an average of 1.4 days, to make sure that proper goods is available for delivery. This type is more costly than the other two as it has both raw material cost and process cost included. Most – MRO because it requires high upkeep and must have all replacement parts ready as to keep the high capital investment running. Question 5: Why does inventory flow so quickly through a Frito – Lay plant? Inventory flow so quickly through a Frito – Lay plant because the plant is automated, efficient and suffers minimal breakdown. Furthermore, the raw materials such as corn and potatoes need to be processed quickly as they are perishable items. Question 6: Why does the company keep so many plants open? The company keeps so many plants open because they need to have rapid production of the products to ensure the freshness and to be near the consumer/market. Question 7: Why doesn’t Frito – Lay make all its 41 products at each of its
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