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The document discusses different inventory management models that are appropriate for different supply chain situations. It explains that a periodic model is best for a milk supplier due to perishable goods, while a reorder point model works well for prescription medicines. A hybrid periodic/reorder point model balances regular refueling needs with flexibility for a trucking company's fluctuating fuel consumption. The document emphasizes minimizing stockouts to avoid costs from delays and unhappy customers. It also notes the tradeoff between storage costs and stockout risks in choosing an inventory management system.

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14 views

Discussio 1

The document discusses different inventory management models that are appropriate for different supply chain situations. It explains that a periodic model is best for a milk supplier due to perishable goods, while a reorder point model works well for prescription medicines. A hybrid periodic/reorder point model balances regular refueling needs with flexibility for a trucking company's fluctuating fuel consumption. The document emphasizes minimizing stockouts to avoid costs from delays and unhappy customers. It also notes the tradeoff between storage costs and stockout risks in choosing an inventory management system.

Uploaded by

dennis ndege
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Discussion

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Discussion

Optimization of the supply chain is essential for efficient use of resources. Inventory

management plays a vital role in this process, including systematic, secure, and seasonal

inventory. Each method has specific characteristics and implications for the entire supply chain.

For milk suppliers Dallas Albertsons, the periodic model seems appropriate. Due to the limited

life of dairy products, a frequent restocking program will refresh them. This is consistent with a

periodic schedule of regular deliveries to maintain inventory (Radhakrishnan et al., 2019). On the

other hand, a fixed quantity with a reorder point model would be appropriate for ordering

prescription. Medicines have specific management strategies, and ensuring that reorder points

are consistently supplied to match fluctuating demand will prevent shortages (Papageorgiou et

al., 2000). When buying fuel, a hybrid model combining periodic fixed quantity and reorder

point elements would be adequate for a trucking company. Monitoring fuel levels and refilling

when the indicator drops is a practical approach where the reorder point has been reached. If you

can buy a fixed quantity, this balances the need for regular refueling with the flexibility to adjust

to varying consumption rates.

The highest storage costs are usually associated with running out of gas for a trucking

company. These costs extend beyond the cash flow, as they can cause delivery delays, missed

appointments and even accidents on a large scale. Therefore, it is essential to implement an

inventory system that minimizes the risk of stockouts under such extreme conditions. Storing and

storing large amounts of material is not optimal for several reasons (Radhakrishnan et al., 2019).

Stockouts can lead to supply chains, delays, unhappy customers and potential financial losses.

On the other hand, many storage units are cost-effective, incur storage costs, and may need to be
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updated (Papageorgiou et al., 2000). Maintaining adequate inventory levels while maintaining a

balance between demand fluctuations is critical to avoiding this pitfall.

Inventory systems are essential for the management plan to do things better. Supply chain

leaders can lower costs, stop stock shortages, and boost overall performance by choosing the best

system for each situation. The type of expenses, such as buying costs, ordering fees and keeping

charges, impact the selection of an inventory system (Papageorgiou et al., 2000). Putting safety

steps in place and lowering the stock you have on hand can help lessen costs from theft or loss.

Finally, a good stock management plan helps improve the whole supply chain. This keeps things

running smoothly and makes customers happy.


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References

Papageorgiou, L. G., Rotstein, G. E., & Shah, N. (2000). Strategic Supply Chain Optimization for the

Pharmaceutical Industries. Industrial & Engineering Chemistry Research, 40(1), 275–286.

https://doi.org/10.1021/ie990870t

Radhakrishnan, P., Prasad, V., Pradesh, A., & Gopalan, M. (2019). Inventory Optimization in Supply

Chain Management using Genetic Algorithm. IJCSNS International Journal of Computer

Science and Network Security, 9(1), 33. https://citeseerx.ist.psu.edu/document?

repid=rep1&type=pdf&doi=b6e062420c537f8c843f6b4220bd0955fb02b787

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