Unit Ten Journal - Ethan Noble

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Unit Ten Journal Ethan Noble Purdue Global University MT435 – Operations Management Dr. Christopher Roberts 4/24//2024 1

Unit Ten Journal Research the following topics related to quality management: The purpose of this journal is to research three different topics related to quality management. The three different topics I decided to research were the following methods or strategies: Carry costs, safety stock, and stockout. All three topics have their pros and cons, and I will describe them in this journal. Carry Costs The first topic I want to discuss is carry costs. These are the expenses associated with storing and handling inventory. Various expenses can include warehouse expenses, opportunity costs associated with inventory, bulk inventory, labor expenses, and insurance expenses. The main benefit associated with carry costs are to avoid uncertainty and optimize inventory levels while making production processes the most efficient (Russell & Taylor, 2023). These expenses can lead to potential reductions in costs overall. Study Notes:  Expenses that involve carrying inventory such as operating out of a warehouse and holding inventory there.  Main purpose is to improve efficiencies and control inventories. The end result is to reduce overall costs. Safety Stock 2

Next, I will discuss the safety stock. Safety stock is waste or excess inventory that acts as a buffer zone against uncertainty in the supply chain or market demand. This buffer is believed to be used to face a shortage in inventory in order to provide the main goal of customer satisfaction. The main objective of safety stock is to mitigate risk and in the variables of the supply chain such as supply, demand, disruptions, and even lead times, or price increases or recalls. The point is to be efficient and only keep a manageable amount of backstock and inventory that won’t tie up the company’s cash positions. Study Notes  Backstock used a buffer to avoid uncertainty and ensure customer satisfaction.  Main point is to mitigate risk with the variables of the supply chain and keep it manageable.  Stockout Lastly, the final topic I will discuss is stockout. This is when a company completely runs out of inventory of certain products and cannot fulfill orders to their customers. The cause of a stockout is due to negligence by the company. This could be due to inaccurate or lack of forecasting and market research. There could also be issues within the companies supply chain that are uncontrollable to them. It is essential for companies to create plans to combat stockout with strategies including forecasting, analyzing historical data and market trends, evaluating customer feedback, and even allowing a buffer on inventory and managing it efficiently (Russell & Taylor, 2023).This is very important to remain in favor with the company’s customer base. 3

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Study Notes  Stockouts are when a company runs out of inventory and cannot fulfill orders.  This could be caused by supply chain issues or internal forecasting issues. Good companies should be able to provide solutions to maintain customer satisfaction. 4

References Russell, R. S., & Taylor, B. W. (2023). Operations and Supply Chain Management (11th ed.). Wiley Global Education US. https://purdueuniversityglobal.vitalsource.com/books/9781119905622 5

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