ASE STUDY: DELIVERY STRATEGY AT MOONCHEM Consignment Inventory allows you to ship products to your customers transferring ownership

at the time of MoonChem is a manufacturer of specialty chemicals used in a variety of industrial applications. The vicepresident of MoonChem would like to conduct a study on the policy of providing consignment inventory to its customers in the Midwest region. The objective of this study is to analyze different options for distribution available in the Peoria region to decide on the optimal distribution policy. Results from this study would allow the company to introduce the consignment inventory strategy nationally. The current strategy of MoonChem is to send full truckloads to each customer to replenish their consignment inventory. The current annual cost of MoonChems strategy of sending full truckloads to each customer in the Peoria region to replenish consignment inventory is $156, 383.33. Alternatives options were tested to identify what is the best alternative for MoonChem. The first option is that MoonChem delivers its product to his customers separately. The second option is that MoonChem jointly delivers its product to his customers. The third option is that MoonChem delivers its products jointly for a selected subset of products (Tailored Aggregation). The total annual cost for Option 1 is $21,441.31. The total annual cost for Option 2 is $19,395.88. Tailored Aggregation Option shows that the total annual cost is $24,877.34. Therefore, our team recommends that Option 2 (Combined Orders) is the best option for MoonChem since it incurred the lowest annual cost. Its main disadvantage is that it is not selective enough in deciding what should be ordered together. Therefore, it is possible that some of MoonChem's customers will not have enough chemicals in stock or will have too much in stock. The impact of our recommendation on consignment inventory for MoonChem is an improveme ... consumption. Some previous notions: BENEFITS:

Ship products to your customer and retain ownership until the product has been consumed. Maintain accurate financial physical inventory records from shipment through consumption.

Receive consumption notices electronically. Features: New fields in Warehouse Master allow you to flag a warehouse for use as a consignment warehouse. Create inventory transactions for receipts and adjustments in the consignment warehouse. Utilize new inquiries and reports for tracking consignment inventory balances and customer orders. Create the consignment relationship between a product, customer, and warehouse in one master

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