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Economies of Scale Answer Respond to two peers dicussion listed below Inventor

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Economies of Scale
Answer Respond to two peers dicussion listed below
Inventory Models
We know that EOQ and JIT are both important methods in Inventory Theory.
Please read this example on EOQ vs. JIT
https://michelbaudin.com/2015/02/23/eoq-versus-jit-explained-through-coffee-beans-and-raspberries/ and comments on the pros and cons of either approach. Then give one example in real world application for either
approach.
Peer 1 (TY)
Hi All,
Companies strive to be efficient as possible, reducing manufacutring time, while providing and meeting client needs. There are many department and divisions within a company. There are many moving parts, with a team it is difficult to keep track of inventory and costs. Many companies have put in place a customer relationship management system or CRM such as Salesforce and Oracle NetSuite. The system allows a business to store customer and potential customer data to assist in customer relationship, helping the company grow. A popular tool at company disposal is forecasting. If a company is selling products directly or through a vendor, forecasting can aid and inform the company what product is selling and what is not. The product that is selling would increase in the manufacturing process and the product that is not would be taken off store shelves to make room for the products that are selling to save the company money and not waste shelf space.
Economic order quantitiy(EOQ) and just-in-time(JIT) are both important methods to controlling inventory. With anything there are pros and cons such as both methods. THe advantages of economic order quantity are that it does minimize storage and holding cost. Whos good at math? The EOQ method does have complicated calculations and this can at times be seen as a disadvantage. Effective EOQ models require very detailed data to calculate several figures. The second method, Just-in-time or JIT advantages are cash flow managment and helps company to reduce clutter, creating more space for products. Due to this method being based solely on existing orders, it is often looked at as not the most effiient system for the unforseen. If a company is not use to high orders coming at once, they company may not have the resources to fulfill the orders
Baudin, M. (2015, Feb 23). EOQ Versus JIT Explained Through Coffee Beans and Raspberries. Retrieved from Michel Baudin’s Blog: https://michelbaudin.com/2015/02/23/eoq-versus-jit-explained-through-coffee-beans-and-raspberries/
Lama Moussawi-Haidar, H. D. (2020, Dec 11). Joint reserve stock and just-in-time inventory under regular preventive maintenance and random disruptions. Retrieved from International Journal of Production Research: https://www.tandfonline.com/doi/abs/10.1080/00207543.2020.1868596
Peer 2(YL)
Pan et al. (2020) described the cognitive reflection test from the economic order quantity (EOQ) viewpoint. Economic order quantity (EOQ) is about placing an order for products from suppliers or in-plant production. The economic order quantity (EOQ) model is applicable when the demand for an item shows a constant, or nearly constant, rate and when the entire quantity ordered arrives in inventory at one point in time (Anderson et al., 2015). When goods are received from suppliers only when needed, it is referred to as just-in-time (JIT). Just in Time (JIT) is a method to cut inventory to the lowest possible level by eliminating waste (Lyu et al., 2020).
Real-world application of EOQ
A retail supermarket places an order for dairy products, particularly milk products, applying economic order quantity (EOQ). The store manager places a fixed charge weekly to determine the demand for dairy products. The manager in the supermarket can anticipate the potential need for milk products based on the number of houses and members in the community.
Real-world application of JIT
Boeing implemented a “just-in-time” system that gives internal and external customers what they want, when they want it, and at the lowest possible cost (Jenkins, n.d.). Boeing needs a considerable investment for the purchase of parts during the manufacturing of aircraft. When parts are purchased from more than 400 suppliers across the globe, the company will incur colossal holding costs. Hence JIT protected the company by reducing inventory costs and meeting customer demands. Some organizations, such as Toyota implementing JIT, refers to it as a lean production system.
Conclusion
Business organizations get influenced by the external environment; therefore, it would be tough to place an order with suppliers with EOQ. The holding costs are fixed and high with EOQ compared with JIT. However, the recent pandemic had disrupted the global supply chains, and organizations, particularly in the automobile and electronic industries, faced uncertainty. Organizations in the manufacturing sector have faced a shortage of chips and other components for electronic products due to the JIT system. Overall to be optimistic, JIT is more appropriate for modern business organizations.
References
Anderson, D. R., Cochran, J. J., Sweeney, D. J., Camm, J. D., Williams, T. A. (2015). An Introduction to Management Science: Quantitative Approaches to Decision Making. United States: Cengage Learning.
Baudin, M. (2015, February 23). EOQ Versus JIT Explained Through Coffee Beans and Raspberries – Michel Baudin’s Blog. https://michelbaudin.com/2015/02/23/eoq-versus-jit-explained-through-coffee-beans-and-raspberries/
Jenkins, M. (n.d.). Boeing Frontiers Online. Retrieved July 30, 2022, from https://www.boeing.com/news/frontiers/archive/2002/august/cover.html
Lyu, Z., Lin, P., Guo, D., & Huang, G. Q. (2020). Towards zero-warehousing smart manufacturing from zero-inventory just-in-time production. Robotics and Computer-Integrated Manufacturing, 64, 101932.
Pan, J., Shachat, J., & Wei, S. (2020). Cognitive reflection and economic order quantity inventory management: An experimental investigation. Managerial and Decision Economics, 41(6), 998-1009.

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