Chapter 8 Questions 11

1263 Words Apr 26th, 2015 6 Pages
Chapter 8 Questions 11-20

8.11 Discuss what is meant by ABC analysis of inventory. What are several measures that can determine ABC status?
Murphy,Jr., Paul R.; Wood, Donald Michael (2014-01-14). Contemporary Logistics (11th Edition) (Page 142). Prentice Hall. Kindle Edition.

ABC analysis of inventory: can be applied in several different ways, recognizes that inventories are not equal value to a firm and that, as a result, all inventories should not be managed in the same way.
The 80/20 rule: that 80 percent of a company’s sales come from 20 percent of its products(conversely, 20 percent of sales come from 80 percent of products)

Measures that can determine ABC status
Sales volume in dollars, sales volume in units, the
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Murphy,Jr., Paul R.; Wood, Donald Michael (2014-01-14). Contemporary Logistics (11th Edition) (Page 144-145). Prentice Hall. Kindle Edition.

Supermarket’s decisions to use substitutions
Many grocery chains target in-stock rates of 95 percent for individual stores so that sufficient substitutes exist for a customer to purchase a substitute item rather than go to a competing store
Hospital decision to use substitutions (more complicated)
What safety risks does a substitute product pose for patients and hospital staff?
Is the substitution product compatible with current equipment?
How will information about the substitute product be communicated to hospital staff?
How do a patient’s insurance requirements impact the ability to use a substitute product?

8.17 How do the consequences of JIT go far beyond inventory management?
Murphy,Jr., Paul R.; Wood, Donald Michael (2014-01-14). Contemporary Logistics (11th Edition) (Page 145). Prentice Hall. Kindle Edition.

The JIT approach has a number of implications for logistical efficiency, one of which is supplier must deliver high-quality materials to the production line; because of JIT’s emphasis on low (no) safety stock, defective materials result in a production line shutdown. Improved product quality from suppliers can be facilitated by looking at suppliers as partners, as opposed to adversaries, in the production process
JIT emphasizes minimal inventory levels,

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