For the grocery delivery business addressed in Question 1, the grocery chains th
ID: 453206 • Letter: F
Question
For the grocery delivery business addressed in Question 1, the grocery chains that you are planning to partner with use differing inventory control models. Company A utilizes the Just-in-Time (JIT) inventory control model and Company B uses an Economic Order Quantity model. In reviewing your business plan, the bank loan officer has noticed this. As the loan officer is not overly familiar with either model, a request has been made of you to provide a description of each model and an explanation of why partnering with these companies would or would not create a conflict within your operations. Provide a detailed analysis of the situation in your business model.
Explanation / Answer
JIT is an inventory strategy companies employ to increase efficiency and decrease wasteby receiving goods only as they are needed in the production process, thereby reducing inventorycosts.This method requires that producers are able to accurately forecast demand. At the point when requesting stock, two of the greatest issues arequality and expense. At the point when all else is equivalent, picking one supplier over another by and large comes down to which supplier offers the best value break for the biggest request. Anytime that the stock levels (inventory) run low, the restocking transactions start once more andreproduced by the demand quantity.The JIT stock administration is intended to help streamlineyour operation, guarantee predictable quality and lessen in house stock.
Company B’s system of Economic Order Quantity means that the store keeps a“continual record of the inventory level for every item.”Operations and Supply ChainManagement, 8thEditionexplains: “Whenever the inventory on hand decreases to apredetermined level, a new order is placed to replenish the stock of inventory. The orderthat is placed is for a fixed amount that minimizes the total inventory costs.” Inventory iscontinuously monitored through the use of UCP symbols and barcodes.