Quantitative Analysis: 1 page memo

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Memo

To: Myron Wise, District Sales Manager/Keepstock

Cc: Michele Adkisson, District Sales Manager

From: Matthew Jannazzo, Manufacturing Account Manager

Date: November 25, 2018

Subject: Increase Vending Inventory Levels to Prevent Stockouts at Boise Cascade

Boise Cascade keeps running out of safety gloves. We are at risk of losing the business due to stock outages. I recommend we increase inventory levels in the vending machines to stop outages. Adding inventory will lower the risk of losing our $175,000 in safety business.

Grainger’s vending program provides point-of-use items to customers. Correct inventory levels will eliminate costly emergency visits. Expansion to the vending program will take a $200 investment. This investment will lead to correct inventory levels for Boise Cascade.

I pulled the last 100 weeks of usage for the gloves. We documented the per week average for this item. The results of my confidence interval are provided in table 1. I used a 99% confidence level to determine the usage range. The average number of gloves used per week is 68. We can expect with 99% confidence that between 64 – 71 pairs of gloves will be used weekly.

Boise Cascade’s weekly usage data:

· Average used per week - 68

· Minimum used per week - 36

· Maximum used per week - 90

I recommend that we:

· Invest $200 in new coils for the machine plus man hours for the install.

· Expand inventory levels from 45 per week to 71 per week

· This expansion will lead to lower risk of stock outs.

In 2018 we spent $1,050 total between 10 separate emergency trips. The total investment to solve the stock out issues in $200. The vending upgrade will save us $850 annually and continue to build confidence in the Keepstock program.

Matthew Jannazzo

Weekly Glove Usage

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 52 60 60 63 63 69 70 52 67 73 75 62 54 44 61 66 75 69 66 66 78 63 81 63 80 85 85 68 85 80 45 85 69 63 64 80 62 75 88 65 65 65 62 62 66 55 68 86 75 88 86 56 62 72 60 44 65 54 73 70 74 65 81 61 61 75 84 77 82 84 76 62 60 60 62 77 74 72 78 79 80 72 75 61 66 79 61 65 62 71 90 63 52 63 40 45 63 60 36 67

Weeks

Pairs of Glove used