Specifically, Riordan stocks the polymer material despite the fact that the material is obtained locally and poses no risk of unavailability or delivery problems. Conversely, it, does not stock the electric motors even though their availability is both crucial to Riordan's production and supply chain and also subject to predictable shortages of as much as 7%. Naturally, the solution would be to stock the electric motors instead of the polymer based on their respective availability. Shipping Costs

The failure of Riordan to stock the electric motors may also be contributing to its overhead expenses unnecessarily. Granted, wholesale demand and standard commercial practices may impose certain restrictions of the ultimate flexibility that Riordan has with respect to its production and supply cycle. However, to whatever extent possible, Riordan should seek to reduce its shipping costs by relying on shipping by sea instead of shipping by air. One way it could accomplish this would be by stocking sufficient quantities of materials and all component parts so that its production run can be completed earlier. The fact that, in the case of highly seasonal products like fans, Riordan may be able to forecast anticipated demand independently would allow it to forecast its raw material and component part inventories. Completing production runs would allow Riordan to ship earlier and therefore through slower means that are much cheaper. In that regard, it might also behoove...

It cannot allow unreliability on the part of its component part suppliers to jeopardize its production cycle. Instead of stocking raw material that is readily available, Riordan should stock component parts that are subject to disruption in their supply. Riordan should rely more on variables that are directly and simply related to retail sales instead of on variables that are both less directly related to sales and more complex to analyze; it should also promote that approach among its customers. To the extent they buy in to that concept, Riordan may also be able to reduce shipping costs by moving up its annual fan production cycle.
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