Ch06_61-81 - 72106 CH06 GGS 3/30/05 2:12 PM Page 61 C H A P...

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61 T EACHING S UGGESTIONS Teaching Suggestion 6.1: Importance of Inventory Control. Inventory control is important to most organizations. This chapter on inventory control can be introduced to students by a discussion of the consequences of too much and not enough inventory. The high cost of carrying too much inventory and the problems of stockouts, lost customers, and reduced market share as a result of too little inventory can be introduced at the beginning of this chap- ter. You may want to use a car dealership example. Should the car dealership stock every model and color? How many types of cars should be stocked? Teaching Suggestion 6.2: Examples of the Functions of Inventory Control. The importance of inventory to store resources, take advantage of quantity discounts, and avoid stockouts is discussed in this chap- ter. Students can be asked to give examples of how each of these important functions has been or can be used by organizations. An in-class discussion will help students realize the relevance of in- ventory control. Teaching Suggestion 6.3: Importance of Basic Inventory Assumptions. The assumptions of the basic EOQ model are important. The sim- ple EOQ formula is a direct result of these assumptions. Students can be told that these assumptions will be relaxed in more com- plex models and inventory procedures. Teaching Suggestion 6.4: Setting Ordering Cost Equal to Carrying Cost Doesn’t Always Work for More Complex Models. This chapter determines the formula for the basic economic order quantity by setting ordering cost equal to carrying cost. Some stu- dents might get the wrong idea that this approach can be used with all inventory problems. Students should be told that calculus pro- cedures can be used to determine the basic EOQ formulas and are needed for more complex inventory situations. Teaching Suggestion 6.5: Other Ways of Looking at Inventory Problems. In this chapter, students are shown how to compute the optimal number of orders per year and the number of days between orders. This was done so students can see that there are different ways to look at the same inventory problem. This is a good place to point out that there are many ways of solving the same problem. The problems at the end of the chapter ask students to compute related inventory quantities, including the optimal number of orders per month and the optimal number of weeks between orders. Teaching Suggestion 6.6: Comparing the Basic EOQ Model with the EOQ Model without the Instantaneous Receipt Assumption. This chapter computes EOQ for the case where the instantaneous receipt assumption is relaxed. A comparison of the traditional EOQ model and this model can be made. The major difference is the holding cost, which is reduced compared to the traditional EOQ formula. This is due to the change in the average inventory level for this model.
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This note was uploaded on 02/06/2012 for the course DSCI 3331 taught by Professor Michaelhanna during the Spring '11 term at UH Clear Lake.

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Ch06_61-81 - 72106 CH06 GGS 3/30/05 2:12 PM Page 61 C H A P...

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