RESULTS FROM THE INTERVIEW: INVENTORY

As we mention before, inventory is a stock of items kept by an organization to meet internal or external customer demand (Russell & Taylor, 2009).

Lyn Bakery’s inventories can be divided into five groups:

i. Raw materials – flour, eggs, butter, sugar, … etc

ii.Purchased parts and suppliers – Lyn Bakery got inventories supply from Yummy Bakery.

iii.Work-in-process products – sponge cake and butter cake base. There are two flavors chocolate
and vanilla.

iv.Tools and equipment – mixer, orange, … etc

v.Finished goods – cakes, biscuits, bun, … etc

Madam Roslina manages her inventories very well. She will drive to suppliers store to buy raw materials by herself. If the supplier delivers inventories, they will charge extra cost for delivery, even though she always buys from the same supplier. By doing this, it will decrease ordering cost rather than if the suppliers deliver to the shop.

Core raw materials are flour, eggs, sugar and butter. These materials including all other materials are bought weekly. This shows that Lyn Bakery is using periodic inventory system.

Madam Roslina will check on her inventories weekly and buy inventories that reach reorder point. She didn’t do calculation on EOQ to determine the optimal order size that will minimize her total inventory cost. She estimates reorder point of her inventories based on her past experiences.

There are some times when she goes and buy her inventories (raw materials), the suppliers offer price discount on item that are bought in higher quantities. This is called quantity discount.

As she didn’t practice calculation on EOQ, she will decide which amount to buy based on her customer’s demand on that specific date or month (this will be explaining further in forecast).

Cakes and bun will last for three to four days. So, because of this, Madam Roslina will makes work in process inventories for her cakes (or she called them ‘base’ for her cakes) thrice a week.

These ‘base’ that she makes are vanilla and chocolate flavor. She makes 10 cakes ‘bases’ each time. So, it will be 30 cake’s bakes for the whole week.

She said from that 30 cakes’ bases, 20 of them are for sale and the other 10 are safety stock in case when she receives any order within that particular week.

Comment on inventory management:

Lyn Bakery is situated in low public area. So, her customer demands are very small. Her cakes demand based on regular customers and walk-in customers which are not very much. She will throw away cakes and buns after four days.

These may lead to wastage as the cakes will expired in three to four days and she will keep on making her cakes’ bases thrice a week. Maybe she can learn to calculate her EOQ, so she won’t suffer much earning cost.

But somehow, the way she is being concern and particular on the hygienist of her products, we will give a bow to her – salute.