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Chapter 3
in the warehouse, Production personnel might transfer individual display boxes directly to
the warehouse, or they might first pack the display boxes into shipping cases.
For small orders (less than a full shipping case), the order picker goes to the
warehouse with a handcart and pulls the number of display boxes listed on the packing
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list. If there are not enough individual display boxes in the warehouse to fill the order, the
picker might break open a shipping case to get the required number of display boxes. If he
does this, he is supposed to advise the warehouse supervisor so she can update the
inventory records—but sometimes this step is overlooked.
The picker then brings the display boxes back to the small-order packing area, where
they are packed into a labeled box—with the packing list enclosed—and prepared for
shipping by a small package shipper.
For large orders (one or more shipping cases), the picker uses a forklift to move the
appropriate number of shipping cases to the large-order packing area. Workers label them
for shipping, load them on a pallet, and attach them to the pallet with shrink-wrap plastic
for protection. These pallets are shipped either by one of Fitter’s two delivery trucks or by
a less-than-truckload (LTL) common carrier.
Fitter uses a PC database program to manage inventory levels in the warehouse. The
program adjusts inventory level figures on a daily basis, using data from production records
(showing what has been added to the warehouse), packing lists (showing what has been
shipped from the warehouse), and any additional sources of data (such as shipping cases
that have been opened to pull display boxes). Each month the warehouse staff conducts a
physical inventory count to compare the actual inventory on hand with what the inventory
records in the database show. Fitter’s monthly inventory counts show that inventory records
are more than 95 percent accurate. Although 95 percent accuracy may not sound too bad,
having 5 percent errors means that Fitter regularly has problems filling orders.
Because snack bars are somewhat perishable, Fitter keeps inventory levels fairly low.
Inventory levels change rapidly during the day, and Fitter’s current system does not
provide a good method for checking inventory availability. As a result, a picker might go to
the shelves to pick an order and discover that there are not enough snack bars to fill the
order. In this case, there are several possible outcomes:
• There might be more of that type of bar in the production area—ready to be
transferred to the warehouse—in which case the picker could wait until the
inventory is received into the warehouse to finish picking the order.
• For an important customer that purchases store-branded snack bars, production
might change the wrappers and display box labels currently on the production
line to the customer’s brand to produce enough bars to complete the order.
• In other situations, the customer may be willing to take a partial shipment
consisting of whatever is on hand, with the rest shipped when it becomes
available—which is known as a backorder.
• Or, the customer might prefer to take the goods on hand, cancel the balance
of the order, and place a new order later.
• If the customer’s company has enough inventory on hand, the customer may
prefer to wait until the whole order can be shipped, thus saving on delivery
charges.
To determine what to do in this situation, the order picker might have conversations
with the warehouse supervisor, production supervisor, and sales clerks. Whatever the final
decision, the warehouse supervisor has to contact the sales clerk so she can notify the

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