Why wouldn't a small company derive much benefit from multi-echelon inventory optimization as a large company? Explain your answer.© BrainMass Inc. brainmass.com June 19, 2018, 11:49 am ad1c9bdddf
Small company and inventory optimization
Why wouldn't a small company derive much benefit from multi-echelon inventory optimization as a large company? Explain your answer.
Inventory management systems are important to manage the inventory costs and the delivery. It helps in improving the inventory turnover and reducing the holding period n the volatile environment. As per scm focus, "Multi echelon inventory optimization is functionality within advanced planning software that allows for the planning of a supply network in a specific way which changes the normal assumptions of the relationship between locations. Unlike normal advanced planning software, software with multi echelon capability assumes that the various locations (specifically parent and child locations) are interrelated. That is the stocking at a parent location impacts both the stocking decision and service level at the child location.
Software must pass two tests in order to determine whether it contains multi echelon logic.
â?¢ When the stocking position at the parent location changes, does the effective lead time change? (not the lead time, that stays the same, but the effective lead time)
â?¢ Is the inventory in the supply network being managed as a "pool?" That is, does the software have the underlying mathematics to perform all the complex ...
Solution discusses multi-echelon inventory optimization