Distribution and Inventory

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Distribution and Inventory
Olympic Steel is one of the leading metals service centre operating in three segments namely pipe and products, speciality metals, and flat carbon products. The firm provides metals distribution and processing services to various customers. The specialty metals segment majorly focuses on the direct distribution and sale of fabricated parts, flat bar products, and processed coil products and stainless sheets (Olympic Steel n.pag). The carbon flat products segment, on the other hand, focuses on the distribution and sale of huge volumes of processed coil and plate products and flat-rolled sheets.
The firm’s major raw materials include aluminium and coated and stainless steel in the form of coil, flat-rolled sheet, pipe and tube, and carbon that is purchased from different primary metal producers. The firm usually maintains a significant stock of metals to ensure that customers get what they want within the required time-frames and to mitigate the effects of the frequent price changes in the metals industry. The inventory is based on market conditions, contracts with customers, and historical buying practices. In the recent past, the firm has entered into carbon and pass through nickel swaps to mitigate its customers’ risk of price volatility. The economic loss or benefit resulting from the changes in the value of the swaps is transferred to the customer after maturity. The sale of metal prod…