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SCM 323 Assignment-1 Star distribution network of light machinery in the Kingdom of Saudi Arabia, has decided to diversify its operations by adding a dairy products production plant. They are looking forward to market their dairy products throughout the Kingdom. The management is aware of the fact that an efficient supply chain is the key to the success in marketing and distribution of dairy products in the parket. While a well designed inventory management system is most important component of any supply chain. To start up with designing the inventory systems the firm needs to know the importance of inventory management, types of inventories to be maintained to deal with the demand in the market, and to calculate the inventory costs to be competitive in the market. So as a step-1 in designing supply chain the firm needs to know inventory control steps and the methods used to set up an efficient inventory control system to deal with intense competition in the market. Your task today is to prepare a proposal for the company showing the following; 1. Importance ofinventory/stockcontrol 2. Different levels of stocks in warehouse 3. Role of lead time in stock control 4. Which stock control model is appropriate for your company and why? Answer the questions based on the concepts You learnt in the SCM323 Module 2. Marks for this Assignment: 5Mark DueDate:16thFeb2023 Notes: 1. Answers should be in your own words and NOT exceed more than 2 pages. 2. No plagiarism. Assignments will be checked for originality. 3. No Cheating. If the evidences of cheating or copying found, BOTH will get ZERO MARKS. Exhaust Bin Level: It is also known as stock out level where the storage bin becomes empty. There is no material available for production. It is also known as ZERO stock level. It should be avoided. Danger warning Level: A level after which the stock out is inevitable. Once the stock reaches at this level the management must take immediate action to replenish the stock, otherwise stock may reach ZERO level. Buffor Stock or Safoty Stock: [1] This is an extra stock which is used to protect against fluctuations in demand or supply. [3] It makes up inventory held in buffer against mistakes in forecasts, meet uncertain customer demands and delay in shipments. Re-order Level: [3] A level where the order for next supply is placed for replenishment. [? It is calculated taking into account the lead time. Maximum Stock Level: (5) This is the maximum quantity of a material available in stock at a period. [7] It is the level over which the stock should not be permitted to rise. Leac ime: [?] It is the time required to obtain the supply after the need is determined. [7] It is the actual interval between re-order level and the actual receipt of materials. [? Lead time has two main parts, the buyer's time and the supplier's time. [? Lead time may vary from group to group and item to item. Lead Time = Buyer's Time + Supplier's Time Buyer's Time: It includes the time for; [] Raising purchase requisition and sending it to purchase department. Obtaining the quotations Placing purchase order Transit, clearance, inspection, acceptance of goods. Supplier's Time: It includes the time required for getting materials ready for shipping and transportation. Such as production, packing, loading, shipping, documentation, etc. Role of Stock/inventory Control in Inventory Management [] Inventory is not just about stocking the items a company sells. [] Inventory management involves taking stock of a business' assets, such as labor, cash and material items used or sold. [ In essence, inventory control enables the business to have what it needs, when it needs it in order to do business. [] With out careful review no item should be stocked, even a cheapest item with least annual consumption. [7. Stocking of materials and the stock levels depend upon availability and delivery of materials. [] So the basic step in inventory control is to determine appropriate stock levels