SCMG201 Week 3 DQ & DQR

3/26/23, 9:03 AM W8: Inventory Management - SCMG201 I001 Winter 2023

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W8: Inventory Management

SCMG201 I001 Winter 2023 LE

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Week 8 Discussion: Inventory Management

CO9: Evaluate the impact of Inventory management systems on a supply chain network's effectiveness

Discussion Prompt:

For this week's Discussion, chose one of the following to research and discuss (partially lifted from Sanders, p. 188):

1. Identify an example of inventory in your own life. Estimate how much it costs you to hold this inventory. Estimate the "ordering cost." How often do you replenish this inventory, and which of the inventory policies does this most closely resemble?

2. Think of a service you recently used. How might this service be restructured to create service inventory as in the example of Zoots (Sanders, p. 188)? What would they have to do? What advantages would the company gain, and how would they better serve their customers?

3. Find at least one business example of a fixed-order quantity system versus a fixed-period quantity system. What are their differences? Which do you think is better, and why?

4. Provide an example of ABC classification in a business you are familiar with. What would be the A inventory items versus B and C? What ordering

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policies would you use for each of these? 5. Explain the primary reasons for carrying inventory. Chose a company that

you believe has mastered each of the primary reasons for carrying inventory. Research a company using "Cross-docking" as a method for reducing inventories. Explain how their Cross-docking system works, what the challenges are, and what the advantages are.

Sanders, Nada R. Supply Chain Management, 2nd Edition. Wiley, 2017-09-18. VitalBook file.

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week 8 question 3 DORIAN WALKER posted Mar 23, 2023 10:11 AM Subscribe

1. Find at least one business example of a fixed-order quantity system versus a fixed-

period quantity system. What are their differences? Which do you think is better,

and why?

1. A fixed-order quantity system is one in which the amount of the order is set, and the order is placed at predetermined intervals. This procedure is often referred to as a periodic review procedure.

2. A fixed-period quantity system uses a set order quantity but variable order placement intervals to order inventories. A periodic review system with regular replenishment is another name for this system.

3. The primary distinction between the two systems is that orders are placed at constant intervals in a fixed-order quantity system. In contrast, a fixed-period quantity system sets charges at variable intervals.

4. Each system has positive and negative aspects. Because the inventory is ordered in more significant amounts, resulting in economies of scale, fixed-order quantity systems are less costly. Fixed-order quantity systems, however, may cause stockouts if demand surges

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Last post Fri at 9:37 AM by Karl

Kinkead

erratically. On the other hand, because the inventory is bought in lower amounts, fixed-period quantity systems are more costly to run but are less prone to stockouts.

5. It is impossible to say for sure which system is superior. The optimal approach for a particular firm will rely on elements like the industry, degree of demand fluctuation, and inventory cost.

There is no conclusive response to the question of which system is superior. However, the nature of the company, the degree of demand variability, and the inventory cost are all considerations that should be considered when selecting the optimal system for a particular organization.

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#3 Damian Hoffman posted Mar 3, 2023 5:37 AM

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Last post March 3 at 9:31 AM

by Karl Kinkead

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Let's take the example of a restaurant and a grocery store. When the restaurant runs out of

certain ingredients, they need to order more to keep up with demand. In a fixed-order

quantity system, the restaurant orders a fixed amount of inventory whenever the inventory

level reaches a certain point. This means the quantity ordered stays the same, but the time

between orders can vary depending on the level of inventory. A grocery store using a

fixed-period quantity system orders a fixed amount of a product at regular time intervals.

For example, the grocery store may order 100 carrots every week, regardless of the

inventory level.

The main difference between the two systems is the way they manage inventory. The

fixed-order quantity system tries to maintain a consistent inventory level while minimizing

the number of orders. In contrast, the fixed-period quantity system tries to minimize the

number of stock outs by ordering at fixed time intervals, regardless of inventory levels.

Choosing the right system depends on the nature of the business, the inventory being

managed, and the cost of ordering and holding inventory. A fixed-order quantity system

may work better for businesses with unpredictable demand, while a fixed-period quantity

system may work better for businesses with consistent demand patterns. In some cases, a

combination of both systems may be best to balance inventory costs and stockout risks.

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