Improper Inventory Management and Sales Forecast at Merdeka

This article discusses the issues faced by Merdeka due to improper inventory management and faulty sales forecast. It suggests two alternative steps that can be taken to ensure customer satisfaction and improve sales forecast accuracy. The chosen alternative is also explained along with the method to measure the improvement in customer satisfaction.

Running head: SUPPLY CHAIN MANAGEMENT
Supply Chain Management
Name of the Student:
Name of the University:
Author Note:

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Answer 1:
The primary issues at Merdeka are improper management of inventory and failure to
forecast sales which ultimately results in lower level of customer satisfaction. These issues have
resulted in low profits.
The main reason behind these two issues are failure of the company to manage the stock
of inventory efficiently. The company emphasized on saving inventory acquiring costs instead of
acquiring high quality inventory. This resulted in maintain ace of a supply chain containing
several suppliers within Canada for smaller components and within North America for Biggert
and more expensive components. The company as a result was not able to manage the order
placement and delivery of inventories from them. This often resulted in low productivity, late
delivery and customer resentment (Christopher, 2016).
Answer 2:
The main causes behind the issues of improper inventory management and faulty sales
forecast was inefficient management of the supply chain. Merdeka acquired cheap components
from the local market and the expensive component from North American suppliers. for
example, item 1013 which is expensive was purchased from North American suppliers while
item 5066 which was cheapo was purchased from local suppliers. Now, the BBQ, the finished
products required both the type of products. Thus, if expensive component’s delivery used to be
delayed, the entire production process was delayed. The smaller components had to be held for
longer time period which effected the liquidity of the current assets of the company. This delayed
production of finished goods resulted in improper sales forecast which paved way for customer
complaint (Jacobs, Chase and Lummus, 2014).

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Answer 3:
The two alternative steps which Merdeka can take to forecast sales accurately and ensure
customer satisfaction are:
Alternative 1:
The firm should maintain a contingent stock of finished products. it would able to sell to
customers in case of delay of inventory delivery and resulted production delay. One can justify
that the company to a certain can forecast sales accurately based on its finished goods stocks in
hand for short time, thus reducing customer dissatisfaction (Stadtler, 2015).
Alternative 2:
The firm should acquire stock of expensive components from local suppliers
simultaneously acquiring them from North American suppliers. It can be justified that this
approach this would ensure uninterrupted supply of finished goods and timely delivery of
finished goods to suppliers (Monczka et al., 2015).
Answer 4:
The chosen alternative is the first which revolved around maintaining contingent stock of
finished goods.
a. The contingent theory mentions that business organizations should maintain continent
resources including financial resources, human resources and material resources. Thus
maintaining contingent would help Merdeka in the given situation to cater to the needs of
the customers till production of fresh finished goods (Stadtler, 2015).

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b. The sale of contingent supply of finished goods would enable the company to minimize
customer resentment.
Answer 5.
The company would be able to measure the improvement in the customer by measuring
the numbers for repeat orders and and revenue generation. This would earn the company to
identify increase in customer satisfaction due to better sales forecast and maintaining
contingency stock (Jacobs, Chase and Lummus, 2014).

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References:
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management
(pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and
supply chain management. Cengage Learning.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.