Running head INVENTORY PROPOSAL 1 Inventory Proposal Part Three of Three Team A QRB 501 March 12 2012 Terrance Feravich INVENTORY PROPOSAL 2 Abstract Team B uses raw inventory data to illustrate statistical information discuss inventory systems and problems explain the problem determined in the inventory system and design a table with data converted into dices Multiple companies conversion of index data into figures demonstrates incline and decline of inventory data Team B in weeks two through five for the Quantitative Reasoning for Business class researched McDonald s Brinker International Sears Corporation Wal Mart and University of Phoenix Summer Historical Data Team B converted times series data for multiple businesses and inventory analysis The chosen inventory data to complete the project proposal is University of Phoenix Summer Historical Inventory data Team B replaced the Wal Mart data with UOPX Summer Historical Inventory Data for analytical purposes and identified opportunities to improve inventory management The Week three analysis of Wal Mart s inventory helped Team B to understand the UOPX Summer Historical Inventory Data problem of ensuring product availability INVENTORY PROPOSAL 3 Inventory Proposal Part Three of Three An inventory proposal helps businesses understand how they sell inventory and provides information for on hand balance This paper includes a proposal using seasonal indices to analyze the inventory data and show the slope intercept formula to determine the annual increase in inventory Additionally Team B provides monthly seasonal indices for data identifies the busy months identifies the slow months shows a histogram of the inventory data and forecasts the future of inventory costs by applying the time value of money TVM concept the University of Phoenix Summer Historical Inventory Data Inventory Proposal Guidelines An inventory management proposal should follow guidelines Proposal guidelines define organizational and personal accountability for equipment prescribe procedures in the receipt valuation record keeping maintenance issuance and disposal of inventory LogCluster 2012 Additional inventory proposals introduce the Asset Management Database AMD When using the above guidelines various steps occur for accountability of inventory LogCluster 2012 states that the following steps should occur 1 Principles correct inventory records transactions of inventory and classifications of inventory 2 Responsibilities and Accountability Management is accountable for all inventory employees are accountable for proper use and maintenance of equipment they use 3 Procedures Management has to have approval before ordering new items 4 Acquisition New equipment registration in AMD 5 Valuation purchases evaluation at acquisition costs INVENTORY PROPOSAL 4 6 Issuance All equipment issued to staff for record 7 Transfer Anything transferred to another department s record for maintain 8 Counting and Reporting A physical count of all inventories done monthly 9 Disposal Any inventory not of use should be reported 10 Handover and Return All equipment used by employees should be returned or handed over to another employee and recorded 11 Request Any new equipment has to be requested through management and either loaned from another department or bought Inventory Problem Inventory mismanagement is one of the most common causes of company decline Goldman Associates 2010 When a company deals with inventory management the company usually contains powerful groups to help maximize the inventory investments Sales managers usually want to have a larger inventory to keep the shelves stocked at all times but managers must be mindful that inventory does not have value until it is sold When a company has inventory sitting and not sold the company is paying for the space maybe in a warehouse and the product itself This very reason can be that the seasons change or items contain damage when this occurs management lowers prices to encourage consumers to buy the merchandise Inventory Systems and Problems In some cases the inventory of a company can be the single largest asset on the balance sheet Minimizing the problems associated with it is a critical function that demands the attention of management Assisting management in monitoring this function in any product heavy business is an effective inventory management method Effective inventory management INVENTORY PROPOSAL 5 has tremendous implications to the profitability of the business The inventory system will also be essential to planning executing and controlling the entire supply chain network Donovan 2012 According to Webster s Online Dictionary 2012 an inventory control problem is a type of problem encountered within the field optimal control para 1 According to Webster s Online Dictionary 2012 an inventory control system is defined as an integrated package of software and hardware used in warehouse operations and elsewhere to monitor the quantity location and status of inventory as well as the related shipping receiving picking and put away processes para 1 The processes can help a business organize and learns how to react quickly to the rapid changes in the market University of Phoenix Summer Historical Inventory Data The University of Phoenix Summer Historical Inventory Data is the source for developing Team B s inventory management proposal Annual trend lines were plotted in Microsoft Excel to display the inventory amounts for each year The trend line in this case is positive which indicates that the likelihood of inventory levels in the subsequent years will continue to rise without considering any additional factors that may influence the business Factors to support the observation include economic instability from stock market volatility a decline in consumer confidence severe weather and acts of terrorism Table 1 shows the existing data and includes the fifth year projections Figure 1 displays the trend line INVENTORY PROPOSAL 6 UOP Summer Historical Inventory Data University of Phoenix Summer Historical Inventory Data Table 1 Month Year 1 18 000 19 800 15 700 53 600 83 200 72 900 55 200 57 350 15 400 27 700 21 400 17 100 Year 2 45 100 46 530 22 100 41 350 46 000 41 800 39 800 64 100 47 600 43 050 39 300 10 300 Year 3 59 800 30 740 47 800 73 890 60 200 55 200 32 180 38 600 25 020 51 300 31 790 31 100 Year 4 35 500 51 250 34 400 68 000 68 100 61 100 62 300 66 500 31 400 36 500 16 800 18 900 1 2 3 4 5 6 7 8 9 10 11 12 Total