McCann Container Corp. is a manufacturer of metal and plastic containers such as motor oil cans, milk cartons, and juice cans. Ralph McCann, Jr., assumed the presidency of the family owned company upon graduation from college. One of McCann's first actions was to install a personal computer to compute payroll, maintain inventory records, prepare purchase orders, and handle the firm's accounts payable.To answer the following questions, you will find it helpful to compare the current inventory system to the general systems model of the firm.
In the inventory system, the computer maintains a master record for each inventory item, describing its balance on hand, reorder point, order quantity, quantity on order, lead time, and so on. Each time an inventory transaction is processed, the new balance is compared to the reorder point with allowance for any quantity already on order. When the balance drops below the reorder point, the computer prints a purchase order. The purchase orders are sent to McCann so that he can check them for accuracy, verify the need to make the purchase, and initial them. After his approval (which, due to his busy schedule, might take two days), the multiple-part purchase orders are separated. The original copy is sent to the vendor, the second copy is placed in the unfilled-order file, and the third copy is sent to the receiving department.
Quite often the ordered materials do not arrive soon enough and production must be delayed. This results in missed deliveries and lost business. McCann is dismayed over the poor performance of the inventory system, especially after having made it one of his top-priority computer applications. If the situation does not improve, McCann is planning to revert to the manual system.
Prepared by David L. March -- Last Revised on August 28, 2002
COPYRIGHT © 1998-2002 BY DAVID L. MARCH