BUS352 Inventory Management and COGS Relationship for ConnectWave Technologies

Question 1

ConnectWave Technologies produces consumer routers. The company collects 72 months of cost and inventory data (January 2019 to December 2024) for analysis. The cost data are the monthly COGS (in $’000), and the inventory data are the on-hand inventory (in units) of raw materials, work-in-process, and finished goods at the end of a month. Data are included in
Appendix 1.

(a) Perform data visualisation and descriptive analytics for the two variables according to the following requirements:
(i) Do you observe any specific abnormality and data integrity problems in the data set? If yes, how would you deal with these issues? Justify your measures.
Implement these measures in the data set and use the rectified data set in the
subsequent analysis. (Word count: 100)
(10 marks)
(ii) Select one (1) appropriate chart type to visualise and present data. Provide a brief justification of your choice. What observations and conclusions can you make from the data visualisation? (Word count: 200)
(15 marks)
(iii) Produce descriptive statistics of the two variables. Provide a brief discussion of the key statistics. What can you observe and conclude from the descriptive statistics? Are these observations and conclusions consistent with those from (a)(ii)? (Word count: 200)
(15 marks)

The operations manager of the company is interested in having a better understanding of the relationship between inventory management and production cost. The company’s inventory management uses a simple policy, i.e., at the beginning of every month, the procurement department will place an order to suppliers to replenish each Stock Keeping Unit (SKU). The order size will bring the on-hand inventory of that SKU to a level that is equal to the average quantity of the previous three months’ usage of that SKU in production. This way, the company aims to make the inventory level follow the production trend.

(b) Analyse and examine the relationship between COGS and inventory data according to the following requirements:
(i) Use one (1) appropriate chart type to examine the relationship between COGS and the inventory level for the same month. Provide a brief justification of your choice of the chart type. What can you observe and conclude from the chart? Note that you should NOT perform any statistical analysis for this question and only elaborate your observation on the chart. (Word count: 150)
(15 marks)
(ii) Use one (1) appropriate statistical analysis tool to examine the relationship between the two variables. Clearly present the steps of analysis and components of the tool (if any), as well as the numerical result. What can be concluded from the analysis? Is this conclusion consistent with the observations and conclusions in (b)(i)? Can the result of the analysis support the hypothesis that inventory level follows production trend? (Word count: 150)
(25 marks)

(c) For the diagnostic analytics performed in (b)(i) and (b)(ii), any improvement can be made so that the result can be more plausible and insightful? You can comment on the design of the analysis. (Word count: 100)
(10 marks)

(d) Reflecting on the inventory management concepts discussed in Seminar 2, what suggestions can you make to improve the company’s inventory management? (Word count: 100)
(10 marks)

For the data analysis work, you are required to embed the related Microsoft Excel worksheets (not screenshots, but the *.xlsx file) at the end of the Word document as an appendix for verification purpose. Please test and make sure the embedded worksheet can be opened properly. A mark deduction penalty may be applied if the Excel worksheet is not included or cannot be opened properly.

If you want to know how to embed a file in WORD, please find the following link for helpful information:

Insert a Chart from an Excel Spreadsheet into Word

Appendix 1. ConnectWave Technologies Cost and Inventory Data

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