Inventory Management System Identify what the sources of costs might be? Actual

Question

Inventory Management System

Identify what the sources of costs might be?
Actual costings are not part of this exercise. Always be on the lookout for the hidden costs that can turn an apparent saving into an actual loss. This includes costs for the BPI team, development, quality assurance, testing, parallel operations during transition, implementation. It should also include any ongoing maintenance or administrative costs.

Consider the impact upon the operation due to the implementation. This would include productivity losses or the need to hire temporaries to cover for personnel while training.

Explanation / Answer

Consider a Retail store like Target who want to manage their inventory The Target store has varied items like clothing, dresses, toys, bikes, cycles, hardware, books, stationeries, biscuits, chocolates, candies, ice creams and many more items The inventory is maintained in a traditional Oracle data base There are few data base programmers but there is a dedicated system administrator for the data base administration tasks like DB tuning etc Hidden costs include loss of data due to not backing up properly periodical backups will cater for any in evitable losses of data Business Process Intelligence (BPI) team will facilitate the business analysis and subsequent process improvements to increase the throughput of the Return on Investment(ROI) Development involves the Software Development Life Cycle (SDLC) stages This spans from Requirement Analysis, Feasibility study, feasibility Report, System Analysis and Design, Coding design , coding, testing, user acceptance, user training and annual maintenance Quality Assurance and testing involves going through many test cases The testing phase includes cost whether third party companies are given the testing task as an outsourced contract or we hire our own employees – both involves cost The purchase of automated testing tools like Hewlett Packard’s (HP) Quick Test Professional (QTP) and International Business Machine ( IBM) ’s rational Rose, win runner, and load runner involves licensing costs Say they want to migrate from their primitive Santa Cruz Operation’s (SCO) Unix to the very powerful Reduced Instructions Set (RISC) RS 6000 IBM AIX Unix servers This will cost a fortune like backing up all their existing inventory data writing lots of Unix shell scripts to do the actual migration During this transition, there will usually be a 3 month period of parallel operation where the tellers and customer service clerks will be expected to enter data in both the old and new system This involves additional costs like paying overtime to the staff for the extra work rendered by them To train the employees on how to use the new operating systems, external trainers would have to be hired and that would involve cost

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