Question

Based on your experience and shopping habit, discuss WHAT inventory control model you will use in the following scenarios and WHY you will use that specific model. a. Supply our kitchen with fresh food b. Obtaining a daily newspaper c. Buying gas for your car d. Ordering the game sweater for the community baseball game Inventory control models: Single period model (also called Newsvendor model) Fixed order quantity model (also called Q-model or EOQ model) Fixed time model (also called P-model)

Answer 1

(A) Supply our kitchen with the best food: Here fixed time model is used for commodities such as milk as it is generally bought in the morning due to its perishable nature while fixed order quantity is generally used for products such as rice flour, spices, etc.

(B) Obtaining a daily newspaper comes under a fixed time period model because there are subscriptions based on a quarterly or yearly basis there is no variation in demand hence only after a fixed period of time subscription is renewed.

(C) Buying gas comes under a fixed quantity model as traveling of the car hence fuel consumption is not definite it varies according to distance traveled daily once the fuel level comes below a certain level the tank is refilled hence fixed order quantity is applicable in such a situation.

(D) Ordering the game sweater for the community baseball game: It comes under the newsboy problem as here demand is uncertain as the product needs to be delivered depends upon the level of audience and product has a less salvage value as it has a print on it. So the correct answer is the newsboy vendor problem.