Inventory Proposal with Summer Historical Inventory Data
Bath and Body Works (BBW) is a franchise owned by Limited Brands Incorporated. BBW sells personal care, beauty, and home fragrance products that are sold under the Bath and Body Works, CO Bigelow, and White Barn Candle brand names. Bath and Body Works is a very successful business and has grown to become one of the largest personal care retailers in the United States.
The inventory discussed below is that of a Bath and Body Works Flagship store. At this store there are two franchises occupying the same space respectively, Bath and Body Works and White Barn Candle Company. Currently this store uses the ...view middle of the document...
Below are Bath and Body Works' summer historical data and its seasonal indices. This information is the result of the company's current inventory system. The seasonal indices below are used to analyze the given inventory data in order to forecast the requirements for next year and construct a histogram of the inventory.
At Bath and Body Works a lack of product equals a lack of sales; therefore, possessing accurate readings of inventory levels support a healthy replenishment for the stores. However, the major setback of the system is that the time and manpower it takes to perform stocktaking every six months. If the inventory check system failed because of network errors, the data become inaccurate or unrecorded. Thus, having a data distribution allows us to view the sales volume and be able to forecast the future sales enabling the organization to provide adequate inventory necessary to meet sales needs. Pictures of a data distribution give us a quick view of the distribution, but we often need to use a single number to summarize a collection of data or to compare two or more collections of data” (Sevilla & Somers, 2007, p. 266)
Perpetual Inventory System
At Bath and Body Works, a Limited Brands store, the Universal Product Code is used along with the Perpetual Inventory System. Bath and Body Works receives between 100-250 boxes twice a week depending upon the season (during holiday season shipments increase to three times a week). The UPC helps to keep track of items with Point-of-Sale (POS) registers. Both of these tools aid in the use of the perpetual inventory system that keeps track of removals from inventory continuously, which monitors the current levels of each item. This system, combined with the UPC, has every inventory item marked with a barcode that contains all of that products information. The boxes or carts that contain the inventory items are also labeled using barcodes. The UPC makes it extremely easy to categorize all inventories within the computer system as well as on paper when necessary. The perpetual inventory system uses computer-based technology including the UPC to track the removal of items from the inventory as well as keep records of items in stock. Toward the end of every month, a physical list of inventory is printed and reviewed by a designated employee. With this method, the computer generated system is monitored by one or more persons throughout the year to ensure everything is in order. Another aspect of the checks and balance system is the bi-annual physical inventory check, when the entire inventory is checked and then the numbers are compared to those in the computer system.
Seasonal Indices to Analyze the Inventory Data
To determine the future inventory cost for the year using the time value of money the team first looked at the inventory cost for each month and then calculated it for the year. This was based on knowing the average inventory cost for all four years and then...