This assignment provides a practical opportunity to apply inventory management and production analysis principles in a real-world context. Analyzing cost factors such as holding, ordering, or setup costs and developing strategic inventory policies facilitate the development of critical decision-making skills. These skills are essential for optimizing operational efficiency and cost-effectiveness in any business.

(This assignment has been adapted from Case Problem 1 Wagner Fabricating Company in Chapter 10 of the textbook.)

Use the information in from Case Problem 1 Wagner Fabricating Company in the course textbook to prepare a managerial report for Wagner Fabricating Company.

Managerial Report

Prepare a managerial report (1,000-1,250 words) to present to the management team at Wagner Fabricating. The purpose of this report is to evaluate whether the company should continue buying a specific part from its current supplier, as described in the textbook scenario, or start producing the part internally. Your report should thoroughly address the following requirements:

Part 1: Analyze the holding costs, including the appropriate annual holding cost rate.

Part 2: Analyze the ordering costs, including the appropriate cost per order from the supplier.

Part 3: Analyze setup costs for the production operation.

Part 4: Develop an inventory policy for the following two alternatives:

1. Ordering a fixed quantity Q from the supplier.
2. Ordering a fixed quantity Q from an in-plant production.

Part 5: Include the following in the policies of parts 4(a) and 4(b):

1. Optimal quantity Q*
2. Number of order or production runs per year
3. Cycle time
4. Reorder point
5. Amount of safety stock
6. Expected minimum inventory
7. Average inventory
8. Annual holding cost
9. Annual ordering cost
10. Annual cost of the units purchased or manufactured
11. Total annual cost of the purchase policy and the total annual cost of the production policy

Part 6: Make a recommendation as to whether the company should purchase or manufacture the part. What savings are associated with your recommendation as compared with the other alternative?

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. A link to the LopesWrite technical support articles is located in Class Resources if you need assistance.

Benchmark Information
This benchmark assignment assesses the following programmatic competency:
MBA
2.3 Analyze data using appropriate statistical modeling.