Operations Management Case Study Solution

1124 Words 5 Pages
Register to read the introduction… For instance some stocks have high usage value and if they are out of stock customers return home disappointed. The ideal way of discriminating stocks is to differentiate stocks by means of their usage values. The items with high usage values should be carefully controlled whereas the items with the low usage values should be controlled rigorously. The idea of using stocks as per their usage is knows as Pareto rule or 80/20 rule. In the excel sheet the classification of the items is done by their usage values. This relationship is used to classify the items into A, B and C categories. Significance of A, B and C * Items under A have 80 percent of their …show more content…
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.

Related Documents