Refer Case Study 2 Based on the current manufacturing set-up at the Mumbai facility, critically EVALUATE the suitability of adopting a pull system…

Based on the facts of the case, Charlotte should recommend the adoption of a pull system of inventory management only for Type 1 drugs. Type 1 drugs are specialty medicines with high profit margins that contribute significantly to the profitability of the Mumbai manufacturing facility. Although the demand for these medicines is infrequent, they can be manufactured in varying quantities without causing any significant disruption to normal production. Further, these medicines have a very short shelf life and are currently produced in anticipation of demand under the push system, resulting in frequent wastage due to expiry while lying in storage. Since a pull system triggers production only in response to actual customer orders, it would substantially reduce inventory holding, minimize wastage arising from expired drugs, and improve overall profitability. On the other hand, Type 2 drugs are in continuous demand throughout the year, have a high inventory turnover, and possess a long shelf life of up to two years. They are therefore more suitable for production under the existing push system, which ensures uninterrupted product availability to wholesalers, hospitals, and pharmacy chains. Similarly, Type 3 drugs are manufactured only in fixed production batches, making it impractical to vary production quantities according to customer orders. Despite their high demand and inventory turnover, the lack of production flexibility makes them unsuitable for a pull system. Although Type 4 drugs also have a short shelf life, their demand is highly volatile and unpredictable, and their production requires significant setup costs and disruption to normal manufacturing operations. Consequently, adopting a pure pull system for these products may not be feasible, particularly where immediate availability is essential during emergencies such as disease outbreaks or disaster relief situations. Accordingly, Type 1 drugs are the most suitable candidates for implementing a pull system of inventory management at the Mumbai manufacturing facility.