Case2 Solution

4 the system keeps buffers between successive

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Unformatted text preview: EOQ/ROP system is essentially a reactive approach; this approach gives only an order quantity, it does not suggest ways to reduce the inventory. 4 2) For implementation of EOQ a perpetual inventory counting system needs to be in place, this implies substantial investments which might not be feasible for some. 3) Even if EOQ system is in place there is necessity to physically count the inventory periodically in order to ascertain the accuracy of the system. 4) EOQ/ ROP is a static system that is, it does not change automatically with the change in demand. For every period a new EOQ/ ROP needs to be established. 5) It is valid for a single product and not a basket of products. (Assumption made while deriving the EOQ/ ROP.) 6) It does not take into account the other production factors such as times required for production run (as in this case, all one size items are produced in one go rather than changing the sizes and hence a sufficient quantity of other sizes need to be at hand in order to reduce the stock out situations.) System used at Blanchard: Advantages1) At Blanchard finished case inventory storage area is not a constraint (as actual finished goods inventory had never occupied mor...
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