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Table of Contents
Particulars
Slide no.
Inventory management
10
New Company
High Lead
Time
Seasonalit
y
Perishabilit
y
No
Inventory
managem
ent
Inventory Management
Demand Profile
Months
= 2.8 = 0.5
= 7.1 = 0.5
Peak
Qtr.
Off Peak
Qtr.
0.43
0.43
1.96
0.78
Reorder Point
2.39
1.22
2.5
2.5
0.5
Assumptions
Benefits from
removing the
perishability
constraint
Distance
Distribution Network
Capabilities
Make to Order versus
Make to stock
Order Fulfilment
cycle
Inventory
Management
Lead time and agility to fulfill orders will take into account
lead time, inventory
Identifying order quantity, safety stock and inventory levels
as well as warehousing versus direct distribution
ng
Deman
d
Determining
the demand
for New
Company
based on
student
profile,
competition
e
Constr
aint
Distance
from Chennai
will
determine
financing,
inventory,
warehouse
needs
Fulfilm
ent
Decisions like
Lead time,
Local
warehousing
versus
existing.
Inventory
profile etc.
High
Financing Decision
Demand
Demand and
Demography
Low
Operations
Decision
Manufacturing
Decision
Logistics
Entry
Decision
Medium
Sourcing- From
Chennai Warehouse
Inventory LevelLow
Others- Use own
logistics
network
InvestmentLow
Sourcing- From
Chennai using third
party logistics
Inventory Level- Low
Others- Use Buyback
contracts to spur
demand
Low
Dont
Enter the Market
Distance
Existing Model
45.00
Margin (in %)
15%
15%
6.75
6.75
38.25
38.25
60%
20%
18.00
36.00
20.25
2.25
0.25
0.75
-0.67
0.67
9.43
10.33
Critical Ratio
Corresponding Z- value
Profit Maximising Order Quantity
Model
Existing
Model
Proposed
Scalable
Model
Standard
Deviation of
Mean daily daily
Demand (in Demand (in Lead Time
lakhs)
lakhs)
(in days)
Month
Expected
demand
during lead
time (in
lakhs)
Safety Stock
at 95%
Reorder
Service Level Point (in
(in lakhs)
lakhs)
Order Qty by
Newsvendor
Model (in
lakhs)
Jan-Mar
Peak
0.08
0.05
25.00
1.96
0.43
2.39
Apr-Jun
Normal
0.03
0.05
25.00
0.78
0.43
1.22
Jul-Sep
Peak
0.08
0.05
25.00
1.96
0.43
2.39
Oct-Dec
Normal
0.03
0.05
25.00
0.78
0.43
1.22
Jan-Mar
Peak
0.08
0.05
15.00
1.18
0.34
1.51
Apr-Jun
Normal
0.03
0.05
15.00
0.47
0.34
0.81
Jul-Sep
Peak
0.08
0.05
15.00
1.18
0.34
1.51
Oct-Dec
Normal
0.03
0.05
15.00
0.47
0.34
0.81
9.43
9.43
10.33
10.33