Steel Work Questions - Essay Example

Steel Works has a high demand for many of its products. The company has a high inventory on many of the products. Steel Works will need to move part of this stored product as soon as possible. The excess of a stored product is keeping the company from showing a profit. This will also reduce costs. Steel Works customers are demanding some of the products, and not too demanding of some of the other products. The customers, especially in the automotive industry are in need of the products Steel Works has to offer.

The customers choose some of the products, and favor these products over other products currently offered by Steel Works. Some of the least expensive products Steel Works has to offer are the products the customers choose not to have. This suggests Steel Works will need to discontinue the use of some of the products. If Steel Works is going to begin showing profits again the company will need to move some of the current inventory, and control the manufacturing of future inventory. Before, Steel Works can sell some of the products they are overstocked on the company will need to reduce the cost to the customer.

By reducing the cost to the customer, the company is making the product seem more appealing to the customer. Everyone likes to save money, even companies. 2.) The coefficient of the inventory tells one the company has too much inventory of the two products. The company should definitely decrease the inventory, as soon as possible. When the company figured the coefficient for the inventory, the numbers were astronomical. The coefficient will tell the company what products should be sold first, and what variations of the two products need to be sold at a discount.

When the company figured the coefficient, the company was surprised at the astronomical amount of inventory the company continues to have at present. 3.) The company has been holding a large amount of inventory. The company has an average monthly inventory of each of the variations of the two products. The lowest the company is over budgeted on inventory is still more than $50. The company is over on average monthly inventory of one of the variations of the two products by more the $10 thousand.

If the company begins to discount some of the overage, the company may soon see a profit to post. The only way to move the inventory at a fast rate is to sell the inventory at a discount, and make the inventory look appealing to the customer, when a company sells products at a discount many customers will purchase in bulk to avoid paying full price at a later date. Steel Works should have been holding no more than $50 overage on the current inventory. With the company being more than $10, thousand on the one variation of the product the company is losing money by not selling this product.

The company needed to pay the employees to manufacture the steel, and the company needs to pay fixed costs to store the product. If the product is being stored the company is not making any money on the product, the company is losing money on the product. 4.) The obvious opportunities are that the company is overproducing these products as well. The company needs to stop manufacturing new steel, and get the inventory under control. When the company begins to get the inventory under control, the company will stop overproducing products, and the company will begin to show profits again.