Gomak Inc.: Abstract
Gomak Inc. is a small business in the distribution industry. The company, owned by Mr Gauthier, imports 28 products in the food industry that it distributes throughout North America. In order to improve its current cash utilization, it is considering changing its inventory policy. Its most important product is a Guérande salt ordered directly from the producer three times a year. Mr Gauthier is considering changing the ordering pattern to improve both the company’s performance and cash flow.
- Prepare the budget or obtain a good understanding of the cash flow situation
- Identify different cost types, namely variable vs. fixed and relevant vs. irrelevant
- Select the appropriate tool (decision support model) for inventory management
- Evaluate the suitable parameters to feed into the model
- Use the selected model to propose an optimal purchasing policy
Main themes covered
- Cash budgeting
- Different types of costs
- Decision support tools for inventory control
Teaching notes are available for teachers only. Contact the HEC Montréal Case Centre for more information.