Operations Management Case Study Solution
The thing is that is objective is impossible. Either the company’s inventory should be high enough. If the inventory is high then there is high cost in maintain it. The company should maintain an average stock cover so that there is no high cost involved in it. The service level is not up to the level as there is no estimate in demand per week. The company is not able to maintain the satisfaction of the customers. The inventory holding cost is 15 percent of the total items. If the inventory remains for the long period of time then the cost of the inventory keeps on increasing.
Significance of EOQ: The formula of EOQ is the best way to balance the advantages and disadvantages of stock holding. The small errors will not result while taking the estimate of the holding cost and the total cost.