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Operations Management_Discussion 4

Operations Management_Discussion 4

Q 1. The owner of Organically Good has asked you to address the following concepts, in an email format: a. What type of inventory management strategy should Organically Good use? Should it be the same at each location? Why or why not? b. What risks and benefits can Organically Good expect due to economies of scale? How do the locations of the 22 farms impact economies of scale? c. What types of data do you expect to collect at each of the farms to help determine optimal inventory levels and expected profits? 2. When responding to at least two classmates, consider their selection of an inventory management strategy. a. What strategy (ies) should Organically Good use? If you choose that same strategy for each location, explain why. If you chose different strategies at different locations, explain why. It should be clear to the reader your reasoning for inventory management strategy (ies). b. Help your peer identify an additional risk or benefit they may have overlooked in their analysis of economies of scale and explain why you chose this risk/benefit. Your response should be formatted as if responding to them in an email.

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The strategy of management of inventory that should be used by Organically is the model of economic order quantity. It is assumed by the model of economic order quantity that demand of customer is constant and there will be depletion of inventory at a rate that is fixed until zero is reached. Levels of inventory are monitored in a continuous manner by businesses engaging in this model. New units are ordered each time in a fixed quantity when a particular quantity remaining is reached. This point of reordering is timed in a specific manner in order for the firm to get the materials when it is needed by the company, avoiding overages or shortages of the industry.