The excel file, is the simulation results of questions and 1 and 2 and responses to questions 3 and 4.. The word file is the summary report of company management of Ebony based on the guidelines ;)

1

Company management (Ebony Bath Soap Company)
Name
Affiliation
March 28, 2019

2

Every organization has a unique management style with their innovative product and
services which helps the company to sustain in the market. The management would make sure as
not to replicate with their competitors in the market, so they would possess different
management style on attracting the customers. The profit management activities focus only on
maximizing the profit, but the nonprofit and public sector focus mainly on the society. So the
style differs among all the three sectors. Strategic decision-making is generally more centralized
in smaller organizations than in larger companies. In the case of Ebony Bath Soap company,
their management includes in controlling the inventory costs (Albright, Winston, & Zappe,
2008). This strategy of the company would allow them to serves its customers at a much lower
time there by increasing the satisfaction of the customers & developing brand value. Also, it
helps the company to better meet the unexpected higher demand periods thereby generating
higher revenues. Hence, interest cost - Unsold inventory is locked working capital for the
company on which it incurs interest costs on the borrowed money.
Based on the simulation results, the Annual Cost output statistical distributions of the
Ebony Bath Soap company is decreasing, hence, the result is posted below:

Mean Annual Cost
$116,000
$114,000
$112,000
$110,000
$108,000
$106,000
$104,000
$102,000
$100,000
$98,000
$96,000
30

40

50

60
U

70

80

3

We can see that there is normal distribution of the annual cost of the company.
On regards on the Annual Cost output probability distribution of the company, it
observed that there is also normal distribution which we can conclude that at 95% interval, t he
result has fitted in the model, where the annual cost of the company is normal over inventory
versus time.
Descriptive analytics are used in inventory management, to derive average cost spent by
individuals, comparison of YTD sales, cost etc (Bartmann & Beckmann, 1992). It is commonly
used in supply chain management areas. The predictive analytics helps the company with
actionable insights based on data. It helps in understanding the future outcome. The companies
use this statistical data to forecast the future. Predictive Analytics is based on probabilities. With
the help of available historical data, the company uses guesses and certain models to predict the
future (Blackman, 2018). For example, the company uses predictive analytics to forecast future
demand for their products, to forecast future real estate conditions etc. These analytics go beyond
other analytics by recommending more possible course of actions. Prescriptive Analytics are
extremely useful to the companies which help them in assessing a number of possible outcomes.
These analytics go beyond other analytics by recommending more possible course of actions.
Prescriptive Analytics are extremely useful to the companies which help them in assessing a
number of possible outcomes.
Based on the output of annual cost of the company, I would like to recommend that, the
company should come up with automation procedure making it a standalone substem not linked
to any of the business area function. This will result in profitability by increased productivity.
Monitoring vendor management Inventory control in order to manufacture the product on time to

4

meet the demand of the customers. Creating and maintaining the effective warehouse design in
order to manufacture large volume of goods in time. Interpreting all the system into
computerized based sub system into a single cohesive subsystem in order to obtain optimum
result. Knowing that inventory control is nothing but monitoring the systems like purchasing,
shipping, receiving, tracking, warehousing and storage, turnover and reordering. It is very
important these activities should be performed in a systematic steps in order to maintain a good
inventory control system.

5

References
Albright, S.C., Winston, W., and Zappe, C. (2008). Data Analysis and Decision Making with
Microsoft Excel, Revised. Lewisburg, PA : Cengage Learning.
Bartmann, D and Beckmann, M. (1992). Inventory Control. Retrieved from https://epub.uniregensburg.de/27256/1/ubr13608_ocr.pdf
Blackman, J. (2018). Operational intelligence, three ways – descriptive, predictive and
prescriptive. Retrieved from
https://enterpriseiotinsights.com/20181211/channels/fundamentals/descriptive-predictiveprescriptive-analytics


Answers

Ebony Bath Soap Solution
Question 1)

See the Simulation sheet, columns A-H, for the solution to the 52-week simulation. The major components to calculating the
inventory calculation and production level setting.

Column D tracks the inventory which is calculated as last week's inventory plus this week's production (which was set last w
larger. This insures that inventory cannot be negative, and thus, no backorders.
Column E indicates the production level to be set for the following week. A nested IF statement is used. The first check is t
30). If so, next week's production level is set to 130. If not, the inventory level is checked to whether is greater than u (
Otherwise, the production level is unchanged.

All that remains is to calculate the inventory and production change cost. The inventory cost calculated in column F is simpl
week's inventory. Calculating the production change cost in column G is more challenging. The production change cost (here
used to check if the production level has been changed. If there was a change, 3000 is multiplied by one, otherwise, if no ch
simply the sum of the two costs for the week. Cell H9 totals the costs over the year.

Question 2)
@Risk is used to simulate 500 iterations of each of 6 values of U (those in the range J13:J18), using a RiskSimtable function
of which are copied to the Simulation sheet.

Question 3)

The mean, standard deviation and confidence intervals for each value of U is tabulated in the Simulation sheet. The smalles
change if the simulation were done with different random numbers. A plot of the mean annual cost is shown below the tab

Mean Annual Cost

$116,000
$114,000
$112,000
$110,000
$108,000
$106,000
$104,000
$102,000
$100,000
$98,000
$96,000
30

40

50

60
U

Page 1

70

80

Answers

Question 4)
Other production policies that would be useful to investigate include always overproducing to make sure the large switching
Another potential policy is producing at mean demand, and not worrying about shortages. This also helps avoid switching co
inventory storage costs. A third potential policy would be always producing to maintain an exact inventory target--this
would require that the switching costs were somehow reduced or eliminated.

Page 2

Answers

major components to calculating the cost for a given week are the demand generation,

k's production (which was set last week) minus this week's demand or zero, whichever is

atement is used. The first check is to see whether this week's inventory is less than l (here,
d to whether is greater than u (here, 80). If so, ...