Chapter 11 Discussion Questions
1.Consider a supermarket deciding on the size of its replenishment order from Procter & Gamble. What costs should it take into account when making this decision?
The main cost categories for the supermarket’s inventory policy are material costs, ordering costs, and holding costs. Material cost is the money paid to Procter and Gamble for the goods themlves. Ordering costs, also called procurement costs, are incurred by requesting the goods from the supplier and are fixed in the n that they do not vary with the size of the order. Examples of such fixed costs are the labor required to place the order, handle the resultant paperwork and the transportation fee to ship the order. The holding cost is the cost to carry one unit in inventory for a specified period of time, usually one year. This cost is variable and includes the cost of capital and all of the costs associated with physically storing inventory – shrinkage, spoilage or obsolescence, insurance, the cost of capital, the cost of the warehou space, etc.
2.Discuss how various costs for the supermarket in Question 1 change as it decreas the l
ot size ordered from Procter & Gamble.
解方程组
添寿As the lot size ordered from the supplier decreas, the holding cost (variable with respect to lot size) decreas. As the lot size decreas, the ordering cost remains the same, but the annual ordering cost will ri since the total number of orders each year must increa. As the lot size decreas, the cost of the materials will drop on a per-order basis but will stay the same on an annual basis since total annual demand hasn’t changed.
手提式灭火器The exception to this occurs if the supplier has a price break for an order size above a certain threshold; in this ca the cost of the goods might increa if the reduced order size is not sufficient to trigger a substantial per unit discount.
3.As demand at the supermarket chain in Question 1 grows, how would you expect the cycle inventory measured in days of inventory to change? Explain.
As the demand at the supermarket chain grows, we would expect the cycle inventory as measured in days of inventory to decrea. This is becau the relationship between the optimal lot size Q* and the annual demand D is . Since D is under the radical, its doubling to 2D does not translate to a jump from a Q风景的英文* to a 2Q圣水寺* order; it translates to a jump from a Q* to a 1.4Q* order. Thus cycle inventory increas less than the increa in demand. As a result, the days of cycle inventory (=cycle inventory / demand) decreas.
最好色的星座4.The manager at the supermarket in Question 1 wants to decrea the lot size without increasing the costs he incurs. What actions can he take to achieve his objective?
One action would be to simply decrea the lot size and let the robust nature of the EOQ model work its magic. The total cost curve on either side of the optimal order quantity, the Q*, is relatively flat, so movements in either direction have little impact on total annual procurement and carrying costs.
If greater cuts in lot size are desired, the manager can aggregate multiple products in a si
对联怎么贴左右ngle order. Recall that the EOQ model is bad on a one-product-at-a-time assumption; if multiple products are aggregated, then the fixed procurement cost is spread over all of the items and dramatic lot size reductions are possible. If the same products are being ordered by another supermarket in the same chain (or at least by stores that are willing to cooperate) the combined orders can be delivered by a single truck making multiple stops, thereby reducing transportation expen.
Other techniques that should be deployed when aggregating across product lines include advanced shipping notices and RFID tags that will make inventory tracking and warehou management simpler.怎么做油饼
5.Discuss why supply chain profits may be hurt by a retailer making lot sizing decisions with the sole objective of minimizing its own costs. What advantage would result if the entire supply chain could coordinate this decision?
A supply chain is coordinated if the decisions the retailer and supplier make maximize total supply chain profits. In reality, each stage of a supply chain is likely to make lot-sizin
g decisions with an objective of minimizing its own overall costs. The result of this independent decision making can be a lack of coordination in a supply chain becau actions that maximize retailer profits may not maximize supply chain profits. This decision has an effect on overall supply chain costs including inventory holding costs, production costs, transportation costs, ordering costs, and warehousing costs.
