Page 14 - OCS Workbook - Day 2 Tasks (May 2018)

CIMA MAY 2018 – OPERATIONAL CASE STUDY

EXERCISE 2 (INVENTORY MANAGEMENT AND SYSTEMS
MAINTENANCE)

TRIGGER

This morning you receive the following email:
To: You
From: Gwen Giovanni
Sent: Today
Subject: Inventory management and systems maintenance

I have come away from the management meeting just now with some points I think you can help
me with.

During the meeting, concerns were raised about how we manage our inventory. Our most recent
set of financial statements shows a closing inventory balance of T$55,669k which, although
slightly lower than the previous year, remains high. This translates to an inventory holding period
of 243 days!

Comments were made about how successful we have been in terms of integrating our
information systems, including provision of up-to-the-minute inventory data but, as the discussion
developed, it became apparent how little our team knows about methods for managing
inventory. We then got side-tracked when a member of the team highlighted the fact that we
now have a range of information systems within the company, and we are considering the
introduction of further systems e.g. for inventory management, yet we have no formal
procedures for performing systems maintenance. Things could go horribly wrong. We began
chatting through some ideas which would help us to address this risk but we ran out of time.

I am a bit tied up at the moment so I would appreciate it if you could draft me something we can
use to help explain some of these aspects to the team. We can then make an informed decision
as to what changes might be a good idea.

In particular, could you address the following:
• Some reasons as to why the control of inventory is important.
• An outline of the three main types of system available to manage inventory (continuous
inventory system, periodic inventory system and ABC system) and a recommendation from
you, with detailed reasons, as to which approach is the most appropriate for us here at
Mansako.
• I think it would also be a good idea if I was more clued up on a couple of ways of performing
systems maintenance for when the system is in operation. I am aware this can take several
forms. During the management meeting I jotted down the terms ‘corrective maintenance’,
‘adaptive maintenance’ and ‘perfective (preventative) maintenance’ but I know nothing more
than that.

Thanks for this.

TASK
Prepare an email addressing Gwen’s points.
(Time allowed: 30 minutes)

34 KAPLAN PUBLISHING