The Sorenson Reseaarch Company Harvard Case Solution & Analysis

Problem Statement

In the current scenario the company is working on the issues of a huge quantity of their products that exist in their warehouses, but does not reach the dealer. On Several occasions, the dealer receives a late delivery of the product that is also very unfruitful for the company. On the other hand, high warehouse cost and expensive medical products business were also contributing to company’s difficulties. The Sorenson research company is making a lot of efforts to enhance its inventory control in order to reduce inventory capital investment cost  and to improve sales service. Hence, the company has discussed few alternatives to renovate its inventory management system that will in turn increase its sales.

Currently, The company wants to renovate its distribution system and sales forces effectiveness.However to increase their overall sales Sorenson need to increase its inventory storage space.The accumulation of all these key issues to enhance sales Sorenson company has decided to look into this matter by calculating its Economic order quantity and Cash Conversion cycle.


With the help of Economic order quantity, Sorenson would be able to know their expenses on the warehouse in which they hold finished goods and inventory. Calculation based on the holding cost suggest that the company needs to minimize its holding cost in order to maximize its net income.

The company has calculated it was holding through its three main warehouses that are the home warehouse, Secunclario and Garage. By multiplying the number of total workers over their company , with the total cost incurred on each warehouse the company has calculated its inventory holding expenditure.

The second element of (EOQ) is the Annual demand of the product, we are given with the data of four months in which company has mentioned its four months average demand. From then we came to know that company is running its operation during the entire year, which means that their average demand for four months will be the same for next 2 quarters which will  represent its total annual demand.

The figure  2228.775 units suggest that if the order must be delivered up till these units on time then the company would be able to a manages its  expenses  as well as annual demand efficiently.


It’s the cycle through which indicates the mean time in which a company’s product or inventory is converted into cash.Here we have also assumed that the company is making all its sales on credit........................

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