Operations management

Using the data table below to support your argument, critically discuss the merits of using an EOQ/ROP versus TSL approach for stock control. Show all your calculations. State the assumptions and limitations of the EOQ/ROP model.

Explain why the 'normal assumptions' applied for the inventory control of fast- moving products should not always be applied to slow-moving products

Product A: stored in a regional distribution centre (RDC) Unit Cost Price 18.00 Cost to place a replenishment order 20.00 Inventory holding rate per annum 25% Replenishment Lead-time 2 weeks Stock Review Interval (for a TSL policy) 1 week 600 units Forecast of weekly shipments to customers Standard Deviation in forecast error, o 60 units Target cycle service level from the RDC / 95% /1.64 z value Demand pattern stationary Product A: stored in a regional distribution centre (RDC) Unit Cost Price 18.00 Cost to place a replenishment order 20.00 Inventory holding rate per annum 25% Replenishment Lead-time 2 weeks Stock Review Interval (for a TSL policy) 1 week 600 units Forecast of weekly shipments to customers Standard Deviation in forecast error, o 60 units Target cycle service level from the RDC / 95% /1.64 z value Demand pattern stationary