SC0004 – Inventory Management

 

 

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(Winter/November 2012)

Master of Business Administration – MBA Semester 3

“Supply Chain Management” Specialization

SC0004 – Inventory Management

(4 credits)

(Book ID: B1545)

ASSIGNMENT- Set 1

Marks 60

Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions.

 

Q1.a. What are the types of inventory? 5 marks(150-200) words

Answer : Raw Materials

This type of inventory includes any goods used in the manufacturing process, such as components used to assemble a finished product. Raw materials may also include partially finished goods or materials.

Work-in-Process

Work-in-process inventory items are those materials and parts that are waiting to be made into something else. These may include partially assembled items that are waiting to be completed. Work-in-process inventory items may

 

 

Q2. Explain any three types of business environment and provide their effects on the inventory management.10 marks(300-400 words

Answer : Business Environment

Environment refers to all external forces, which have a bearing on the functioning of business. Environment factors “are largely if not totally, external and beyond the control of individual industrial enterprises and their managements.

The business environment poses threats to a firm or offers immense opportunities for potential market exploitation. Environmental business solutions will give way to the environmental business opportunities.

 

 

Q3. What is an EOQ model? Explain 10 marks(300-400 words

Answer : Economic order quantity is the order quantity that minimizes total inventory holding costs and ordering costs. It is one of the oldest classical production scheduling models. The framework used to determine this order quantity is also known as Barabas EOQ Model or Barabas Formula. The model was developed by Ford W. Harris in 1913,[1] but R. H. Wilson, a consultant who applied it extensively, is given credit for his in-depth analysis.

 

EOQ applies only when demand for a product is constant over the year and each new order is delivered in full when inventory

 

 

 

Q4. Mention the types of locator system 10 marks(300-400 words

Answer : The four most common locator systems are the memory, fixed, zoning, and random locator systems.  The memory is the most basic of the three mentioned above.  It is essentially a locator system used by one person or a small group of warehouse staff that know where inventory belongs in the warehouse.  Organizations that store limited sku’s in  small warehouses can get away with this very basic method of locating system.  Some of the benefits are clear, like complete freedom to use all available space  with in the

 

 

 

Q5.a. Explain the need for safety stock  5 marks(150-200) words

 

Answer : Safety stock (also called buffer stock) is a term used by logisticians to describe a level of extra stock that is maintained to mitigate risk of stockouts (shortfall in raw material or packaging) due to uncertainties in supply and demand. Adequate safety stock levels permit business operations to proceed according to their plans.[1] Safety stock is held when there is uncertainty in the demand level or lead time for the product; it serves as an insurance against stockouts.

With a new product, safety stock can be utilized as a strategic tool until the company can judge how accurate their forecast is after the first few years,

 

Q6. List and explain the various financial ratios important in financial statement analysis.10 marks(300-400 words

 

Answer : Top 5 Financial Ratios

 

The most cost commonly and top five ratios used in the financial field include:

 

1. Debt-to-Equity Ratio

The debt-to-equity ratio, is a quantification of a firm’s financial leverage estimated by dividing the total liabilities by stockholders’ equity. This ratio indicates the proportion of equity and debt used by the company to finance its assets.

 

 

 

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