World Affairs - McDonalds

Inventory Management:

McDonald utilize Just  in time(JIT) inventory management system. As the name indicates, Just in time (JIT) dispense the supplies the customer in time. When a customer places an orders for burger, McDonalds does not start to cook. McD reheats and assembles the order placed by the customer.If McDonalds starts cooking food when  customer places an order McDonalds would take time to process the order .  If  McDonalds begins to cook food when a customer places an order, McDonald’s will take time to prepare a burger.As a fast food chain, it does not want to  make a customer to wait for a long time to wait for the order  . With the  use  of just in Time (JIT) inventory management system, McDonalds pre-cook  burgers and keep them under heating machines. They keep them the burgers as long as possible and eventually discard what could not be sold. The main  advantage of JIT  is to serve the  customer as fast as possible while having the finished product sitting in the inventory as short as possible.

The other aspect of JIT is the drastic reduction in safety stock.  There are two reasons safety stock exists:  variability in demand and variability in lead times from suppliers (in McDonald's case, the supplier is the internal production process). A large benefit of JIT is that it reduces the total cost of ordering and holding inventory.

Stock Control Charts

 A stock control chart depicts  the balance of orders for new inventory against sales. The system is dependent  heavily on figures for the expected sales. The Manugistics system uses a couple years worth of product sales history to give  time series forecasts for each an every  restaurant. The regional planner team applies a specific factor to the time series analysis of  the forecast. After the necessary calculation, the graph can depicts a forecast for future inventory level.

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