Todd Diller
Dr. Min
MGMT 4420
February 23, 2015
Sandusky Winery Case
Problem Analysis
At Sandusky Winery, there seems to be several issues going on within the company’s operations, resulting in a huge inventory mess. The first issue I have noticed is the eagerness of Sandusky Winery’s marketing department. The marketing department wanted to expand product lines and aggressively promote its new products, without taking storage and warehousing into consideration. This high level of production has resulted into a massive surplus of product that has the storage room packed from the floor to the ceiling. The main issue is the poor inventory management. The stock room is filled from the floor to the ceiling with a variety of old wine products and promotional items, including ones from 1996 Summer Olympics. This problem is causing the production manager to take time out to locate the inventory manager, so they can find storage space for these leftover products from previous promotional runs. Some of these items had temperature requirements that were not met when they were left outside a facility in a boxcar, resulting in a loss of product. They often reduce their inventory and storage space by purging their less popular products, resulting in a loss. Sandusky managers their inventory with an “earn and turn” process that does not identify their most popular products or control the excessive supply of unpopular products. Sandusky Winery is limited on additional storage/warehousing also. It does not seem sensible for the company to build an additional warehouse, and the nearest temperature controlled warehouses are located in Columbus, OH and Louisville, KY. The last issue is with the purchasing department. The purchasing department plays a key role in determining total inventory costs. The purchasing department is also responsible for establishing an inventory