| LOG203: Inventory Management |
Question 1
(a) Consider one organization each in retail and manufacturing e.g., NTUC Fairprice or Sheng Siong in retail and Dell or Unilever in manufacturing. Discuss the approaches they follow in managing their stocks and identify the differences in their approach. Provide some background information (e.g. nature of business, products, locations, and customers, etc.) about the chosen organizations. (Try to limit your answer to a maximum of 500 words)
(b) Consider a small pizza restaurant in your neighborhood. Recognize the issues the restaurant might face in managing its stocks. What kind of inventory review sAtem the restaurant should use for its ingredients like pizza dough9 Pizza doughs are purchased from the nearby bakery. Discuss the possible advantages and disadvantages of adopting the system.
Question 2
An Oximeter manufacturer purchases the displays used in the Oximeter from an overseas supplier. The supplier charges $12 per display and there is an ordering cost of $100 every time an order is placed to the supplier. The items take 3 weeks to arrive after the order is placed.
The company is considering whether to make the displays in-house because of the uncertainties in shipment from overseas. The in-house production process for the displays is continuous, occurs at a finite rate, and is non-stop throughout the year. Other information about the display production process is shown in Table 1.
Where X is the last digit of your PI number. If your PI number is B1234567, X =7.
(a) Determine the best order quantity the company should order from the supplier to intimist the annual inventory cost. What is the annual inventory cost if the company decides to purchase that quantity from the supplier? How would the company manage its inventory so that they don’t run out of stocks?
(b) If the company decides to make the displays in-house, solve for the optimal batch size. What does the optimal inventory cost? What is the number of days required to produce a batch of display units? What would be the ROL? State any assumptions made.
(c) Based on the annual inventory cost for the above cases, should the company continue purchasing from the supplier or start producing in-house? Give reasons
