Dell

Reducing Holding Costs
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As a manufacturer of computer-related equipment, Dell faces stock holding issues. This company has been for a long time for having maintained a low inventory. This process has helped the management to reduce the stock maintenance as well as holding costs. The condition has been preserved for both the inventory from the suppliers as well as the finished products. Some of the products are always assembled at the company’s manufacturing facility. As a result of this stock holding policy, Dell has ever expected that the supplier ships all the required equipment immediately they place an order. Thus, this condition has also implied that the supplier will need to maintain vast stocks of wealth. This will prompt a quick delivery as soon as the company places an order. However, this condition may mean that the supplier incurs extra holding cots. However, the supplier may not bear this cost since it is fixed. In case the supplier incurs an additional fee, it is passed to Dell and then to the final consumer of the company products.
However, there is a need for Dell to ensure that the holding costs are maintained. This condition will reduce the transfer of the extra costs to the final consumers. First, there is a need for Dell to know its reorder point. Also, the company should mark its minimum quantity requirements as well as avoiding the dead stocks (Alfares, 2007). Also, it needs to reduce the lead time from the suppliers and avo…