Inventory Management Simulation Discussion and Responses

Inventory Management Simulation Discussion and Responses

Instructions/Descriptions

Inventory Management Simulation Discussion and Responses

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Please reply to these discussion posts with 100 words each. Nothing fancy, just show constructive criticism and respond.

1) For this discussion, I performed the Inventory Management simulation, which walked me through planning, ordering, and stocking for a product based on demand and profit goals. It was vital to keep ordering and holding costs down, as well as to pay attention to current market forecasts and demand trends within the market.

Keeping overall costs low was first and foremost. Utilizing EOQ worked as a rough framework, I kept ordering and holding costs low by ordering ideal amounts. Order too few and you run the risk of paying high shipping fees or, worse, running out of stock. Order too much, and you experience high holding costs, as well as costs from throwing away expired product, loss, etc. For example, when demand was forecasted to increase I increased the amount of Amulet’s I kept in stock because if the product is flying off the shelf, holding costs and costs of lost items won’t be as big of a factor.[Order Now]

Instead, my big orders helped reduce my overall shipping costs during quarters of high sales. Conversely, I chose to keep my orders smaller during periods of low demand. Big orders during these times would raise holding costs to a point where they would offset any benefit from low shipping fees. For example, my decision to only order between 300-500 Amulets during periods of low demand was quite successful, as it kept overall costs low and profit margins steady.

Additionally, paying attention to demand and, overall, how the market behaves was very important to keeping a profitable running inventory. Overall demand dictates your overall strategy, and I learned to pay close attention to customer demand as well as demand forecasting in order to make a more informed decision about how much stock to keep.

2) For this weeks discussion and simulation exercise I completed the inventory management task. I had a tough time with this exercise at first, it took me a couple of tries to really get the groove of ordering. In my first attempts I ordered large quantities in the beginning of the simulation and it shot my costs way up high and I was never able to catch up to those costs with profits. I learned that lower quantities in the beginning will benefit to keep costs down and not until you get rolling and have some profit that you are able and have the profit to order in larger quantities.[Order Now]

Warehouse stock was not a huge concern until there were only a few weeks left and you want to use up that inventory so its doesn’t have to be liquidated as excess inventory after the sales period. Anything left in the warehouse was a hit to your profits and an excess of unused inventory is improper inventory management. Of course there is no need to order 1000 units two days after you just order a large quantity, that is not the best use of money before selling those first units for profit. As far as order quantity I followed the pattern of daily sales, once it got down low I ordered with enough lead time that I wouldn’t run out in that five day shipping period. “However, having backroom inventory has two main disadvantages. First, costs arise as the inventory has to be monitored, managed and double handled in order to restock the shelves when free shelf space is available. Second, operational complexity increases due to misplaced items in the backroom or in the store and due to inventory record inaccuracies, i.e., discrepancies between inventory recorded in the system and physical inventory. All of these reasons make the retailer’s decision making process more complex” (Turgut, Ö., Taube, F., & Minner, S. 2018).

Inventory Management Simulation Discussion and Responses

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