Problem Solution: Burns Auto Corporation
Burns Auto Corporation (BAC) is owned by Thomas Burns. Burns wants to adopt a new way of doing business when it comes to managing inventories and forecasting future sales. Burns is being motivated to make changes to current policy and procedures due to manufacturers mandating a "turn and earn" approach to managing inventories. These mandates are forcing BAC to re-look the current policies and procedures to re-align its organization. Burns must find and implement one of four alternative solutions to current procedures in forecasting and inventory control management to formulate a final solution. The final solution needs to satisfy the needs of all of the stakeholders of BAC. The purpose of this paper is to define the problem that BAC is encountering, identify the issues and opportunities, and then develop a set of goals from the potential alternatives that develop a final solution. There are many possible solutions to Burns Auto's problem. Burns needs to analyze the pros, cons, and the risks associated with the possible solutions before choosing the best solution. Once a solution is chosen, Burns must develop an implementation plan for the solution. This plan must be evaluated and justified before being acted upon.
Situation Background (Step 1)
Burns Auto Corporation (BAC) is comprised of 25 new car dealerships. Dealerships range from Boise to Albuquerque to northern and southern California. BAC has been successful throughout its 12-year history and sales in all markets have recently increased due to a strengthening economy (Phoenix2, 2006).
Historically, BAC has maintained $300M in inventory with a carrying cost of $9M per year. Because inventories have fluctuated over the past two years, the daily average inven ...