Explanation on the basis on which inventory management is done, the different type of inventory models in the context of the assignment given. The process in which each of them is used. This would help you decide the right inventory model. Pl go through this properly.
As a growing corporation in the e-commerce retail apparel industry, XYZ has recently been under pressure to package and ship a higher volume of clothes. In order for the corporation to meet this demand, XYZ’s executive staff must decide either to increase its staffs’ hours in the logistics department and potentially hire another employee or bulk ship inventory to Amazon warehouses to be fulfilled through Amazon Prime. The executive team was able to recreate these two scenarios through linear programing and has determined that the company will seek more profit by utilizing Amazon’s fulfillment services. After analyzing the sales model of using Amazon Inc. fulfillment the recommendations for management are to focus on inventory limits and create patterns that will help forecast the inventory needed. By seeking out inventory models, which resolves dual problems of maintaining sufficient inventories to meet demand, we are able to successfully determine the appropriate inventory limits needed for this operation.
Now we see that there could have been many solutions like for low values of demand, fulfillment should be done in-house and for high values direct shipping should be used. When demand is comparable to capacity, all three sources should be used. Selling price and cost of lost sales do not affect the fulfillment strategy. But they do dictate whether fulfillment is done partially or completely.
Inventory is to be kept at optimum levels. In order for a retailer to stay in business, it must have the products that the customer wants on hand when the customer wants them.
Lead time is the time that