Assignment 9
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School
Eastern Michigan University *
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Course
203
Subject
Industrial Engineering
Date
Feb 20, 2024
Type
docx
Pages
2
Uploaded by ProfPartridgePerson883
Kamerron Parker
SCM380
Assignment #9
1.
Find at least one business example of a fixed-order quantity system versus a fixed-period quantity system. What are their di
erences? Which do you think is better, and why?
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One business example of a fixed-order quantity system is the inventory management system used by many online retailers, like Amazon. In this system, inventory is reordered whenever the stock level drops to a predetermined minimum level. The order quantity is fixed, and the reorder point triggers a new order. A fixed-period quantity system can be exemplified by a business that reviews and orders inventory at regular intervals, such as every two weeks. In this system, the order quantity is not fixed for each reorder; instead, the quantity ordered is based on the amount needed to replenish the inventory to a desired level at that specific review period. Some differences range from order timing, to order size, and inventory monitoring.
The choice as to which is better is difficult to answer, as it often depends on the nature of the products, the cost of holding inventory, the predictability of demand, and the efficiency of the ordering process. Some businesses may even use a combination of both systems for different types of products within their inventory. There isn't a one-size-fits-all answer, and the most effective approach depends on the specific context and requirements of the business. If I had to choose one however, it would be the fixed-order quantity system, as this system reduces the risk of stockouts which I feel is very important. With proper monitoring, it can be beneficial to a business.
2.
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 policies would you use for each of these?
ABC Classification for Walmart
A-Category Items: High-end Electronics
Popular Household Appliances
B-Category Items:
Standard Electronics
Everyday Household Items
C-Category Items:
Store-brand products
Front End Racks
For A-Category, I believe frequent monitoring and real-time data analytics to manage inventory levels would be important to implement to track this area of products. For B-Category items, I’d employ regular monitoring and periodic reviews to ensure that inventory levels meet demand since these are where our everyday sales come from. I would still have periodic reviews and less
frequent monitoring compared to A and B items since this are of products does not contribute much to sales.
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