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Dr. Reddy’s Laboratories Ltd: Inventory ...

Milind G. Sohoni, ...

Case

Dr. Reddy’s Laboratories Ltd: Inventory Management under Resource Constraints

Milind G. Sohoni; Sripad K. Devalkar; Ravi Prakash Mathur; Asrar Ahmed; Mallika Priyadarshini

ISB222 | Published November 10, 2020 | 12 pages Case

Collection: Indian School of Business

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Learning Objectives

Set in 2016 in Hyderabad, India, the case follows Puvvala Yugandhar, Senior Vice President at Dr. Reddy's Laboratories (DRL), as he decides what to do about an underperforming production policy at their plants. Adopted a decade earlier, the policy, called Replenish to Consumption -Pooled (RTC-P), had not delivered the expected results. Specifically, the plants had been seeing an increase in production switchovers and creeping buffer levels for certain products, which had led to higher holding costs and lost sales for certain products. A senior consultant had suggested that DRL switch to a demand estimation-based policy called Replenish to Anticipation (RTA), which attempted to address the above concerns by segregating production capacity and updating buffer levels using demand estimates. However, Yugandhar, well aware of the challenges of changing production policies, wanted to explore a variant of RTC-P called Replenish to Consumption -Dedicated (RTC-D), which followed the same buffer update rules as RTC-P but maintained dedicated capacities for a subset of products.

By studying and solving the decision problem in the case, students should be able to better appreciate the challenges involved in making long-term operational changes. It gives them an opportunity to: (1) understand how each input might impact the final decision, and (2) how to weigh each of these inputs in arriving at the final decision.