May 01, 2023

### Introduction

The report is a reflection of the simulation game played by me. The game relates to inventory planning where I have to decide on the replenishment quantity every week for 2 two products namely adjustable wrench and rock salt. Based on my decision, holding cost and ordering cost shall be determined and the cumulative cost shall be considered. For making the decision relating to purchase quantity, the details of opening stock, mean demand on weekly basis, cost of holding the stock on weekly basis and lastly the order cost has been provided. Further, details in relation to lead time has also been provided. This lead time reflects the time frame within which the goods ordered shall be delivered.

### Analysis

#### Question 1

What strategy did you use in replenishment of Adjustable Wrench?  Please discuss and refer to your simulation results. What strategy did you use in replenishment of Rock Salt? Are they different strategies?  Why?  Please discuss by referring to your results

While deciding on the quantity of stocks to be replenished I first understood the cost of order and the holding cost and I have realised cost of order is far excess than the cost of holding as the cost of holding the goods from one week to other stood at meagre \$ 0.04 while the order cost was very high and stood at \$ 6.3. Thus, I had to plan my order in such a manner that there shall be minimum orders so as to reduce the holding cost. Further, I have also to keep the fact in light that there shall be no stock out as stock cost I much high. Accordingly, to optimise the cost, I have divided the order for 12 weeks in 3 lots such that the mean demand is satisfied and there is minimal inventory at the end. Accordingly, three orders were placed by me in first, fifth and eight week with an intention to minimise the cost of holding the inventory and maximise the profit for the company The total cost has been worked out at \$ 34.26 and the cost of ordering was major among it and stood at \$ 18.9 and the holding cost stood at \$ 15.36. Besides, above there have been no stock out and the ending inventory was minimal at 5 on account of fluctuations in demand with a mean of 20. Thus, under this game I have chosen to allocate the demand over the period and the strategy was to minimise the total through order release management.

In case of rock salt, the strategy was a bit different and in this case the holding cost was a little higher as compared to the case of adjustable wrench. Further, mean demand was similar as in the last case and so was the order cost. In the said case, I have implemented the strategy of regular ordering and increased the quantity ordered over the period of the game. As an outcome, of the said strategy the cost of holding and ordering the goods skyrocketed and totalled to \$ 194.11 which was 6 time the total cost under the first case. There were 11 orders placed and the cost rose on account of such miscalculation.

Recent Post