Case study on inventory management

Introduction:

The process of completing this case study allows the student to be able to apply concepts learned and put them to practice. A better understanding of inventory models, both general purpose and any specific company, will improve logistician's management of that company inventory system. Presently, there are no case studies available to demonstrate the techniques and reinforce the concepts of the various inventory models used by a given company in relation to time series analysis.

Investigative Questions:

To accomplish this task, a number of questions need to be addressed. They are designed to build a foundation of knowledge upon which to begin this case study. They start at a very elementary level with an investigation of inventory theory and the basic classical EOQ model. The questions to be addressed are:

1. What are the purposes of inventory?
2. What are the components of the classical EOQ inventory model?
3. Assume any two values for the annual ordering cost and holding cost. Also you can assume the time between placing an order and its receipt in your company.
4. Based on the forecasting techniques mention earlier in the course, simple moving average can be used. Create your own data for your companys demand, once the demand will establish for for months 1 thru 8 say, the forecast value for month 9 might be used as the demand in the EOQ equation. By having the forecasted demand as being constant, use the EOQ formula and the reorder point (ROP) formula to calculate the optimal order quantity and when the order is placed next time.
5. How does the classical EOQ model used by your proposed company to manage inventory items and to make decisions related to the functionality of your company?