Question 1
Consider an organisation whose operation has been impacted by the COVID-19 pandemic. The organisation can be the organisation you work for or one that you are familiar with. The organisation must hold stock for its operation.
- Explain the role of stock in this particular organisation. Describe its importance to this organisation’s business strategy. For context, you should describe this organisation and the nature of the business it is in, as well as its supply chain and inventory flows. Relate how this organisation controls its stock levels and why it chooses these particular policies.
- The pandemic has severely disrupted the economic activities of Singapore. Every organisation has been affected, to a certain extent. Discuss the impact of the pandemic on inventory management of organisations in general and on your chosen organisation, in particular. You should focus your discussion on different types of organisations like manufacturing, F&B, and services.
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Question 2
Fresh Land supermarket is planning to order an item from its supplier. The supplier offers a discount of r% on orders of 5,000 units. The discount rate, r is given by, r = X + 1, (where X is the last digit of your Student PI number, e.g. if your PI number is W1234567, then X = 7 and the discount rate, r would be r = 7 + 1 = 8). The annual demand for the item is 40,000 units with a unit cost of $9. The ordering cost is $35 per order and the annual inventory carrying cost is 22%.
- Solve for the purchase cost, cost of ordering, cost of carrying, and total cost for an order of 5,000 units and EOQ. Present your findings in a tabular form.
- The supermarket is not sure whether to order based on EOQ or take advantage of the discount offered by the supplier. Based on your finding in part (a), determine which option is better and how much cost can be saved by choosing that option.
- Due to the market conditions, the supermarket expects demand to reduce by 70%. Should the company continue with the decision taken in (b) or reverse the decision? Explain your answer.
