To whom it may concern, As President Jana Fremont requested as the goal of my internship, I have evaluated the current inventory situation at Three Jays Corporation. In order to do so, I had to make a series of analyses that I will proceed to present, which will, in turn, lead to a set of recommendations taking into account the current situation and the objectives of the company. Current Situation Three Jays, as I have learned, is a company which produces and distributes organic jams and jellies. To sustain the growth rate of the last three years, it is necessary to launch a marketing campaign, which would have an estimated return of 20%. However, it is not possible to do so unless the current inventory levels of finished goods are reduced.
Updating the EOQ/ROP procedure I began my work by updating the EOQs (Economic Order Quantities) and ROPs (Reorder Points) for the five different SKUs (Stock-keeping Units) scheduled to be produced in the last week of June (see Annex 1 for nomenclature of the different SKUs). This update was necessary in order to account for the increase in demand in the last year. The requirement to produce a given amount of a SKU is generated each time the stock level for that SKU falls bellow its ROP, which equals three weeks of inventory for each SKU based on average weekly demand, as determined by the sales for the company's first full year of operations. The result was a higher EOQ and ROP for every single SKU (see Annex 1), which would mean that the company would need a greater inventory level, which is contrary to the goals which they are currently trying to
