Concept explainers
Interpretation:Elaborate on the working and benefits (or otherwise) of inventory pooling in the overall system of multiechelon inventory with focus on highest /least benefits by combining the two.
Concept Introduction:A system of inventory having more than one level of warehouses to the retail store is called a multiechelon inventory system e.g. a number of regional warehouses supply to local warehouses which supply to retail stores is a three eichelon system.
One of the methods of reducing/eliminating risks due to uncertainty of consumer/retail demand is to combine (pool) the demands of a number of retail stores. This method is called inventory pooling (aka risk pooling).
Inventory pooling and multiechelon inventory systems can work in tandem but may maximize or minimize benefits as per specific situations.
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Chapter 6 Solutions
Production and Operations Analysis, Seventh Edition
- The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.arrow_forwardHow does the Wilson approach optimize inventory management?arrow_forwardWhy are inventory problems so prevelent and what basic insights do inventory models provide?arrow_forward
- Describe the basic insight that inventory models offer and why are inventory problems so common?arrow_forwardHow does the Wilson approach account for seasonality in inventory management?arrow_forwardWith respect to inventory management, is it better to have an “overstock” than a “stockout”? Why? Why not?arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning