Post Graduate Diploma in Supply
Chain Management (SCM)
Course Name: Supply Chain
Analytics (SCA)
MODULE - 4
INVENTORY MANAGEMENT- I
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LEARNING OBJECTIVES
➢ Understand the fundamental concepts of inventory management, including classifications and
relevant costs.
➢ Grasp the concept of Economic Order Quantity (EOQ) and its role in inventory optimization.
➢ Understand how changes in key parameters affect EOQ.
➢ Apply EOQ concepts to scenarios involving all-time discounts.
➢ Apply EOQ concepts to scenarios involving one-time-only discounts.
➢ Understand EOQ with planned backorder and its implications.
➢ Integrate EOQ concepts into broader inventory management strategies.
➢ Develop critical thinking skills in solving complex inventory management problems.
➢ Enhance communication skills in presenting and justifying inventory management decisions.
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Module 4 Task
You work at DeliCola, a Bangladeshi soft drinks retailer. DeliCola sources one of their best-selling Colas,
X-Cola, from an Indian Cola distributor. The cost of placing an order is $ 513 and the annual holding cost
rate of DeliCola is 14 %. The lead time is 2 weeks and DeliCola only pays for the goods when the
shipment arrives at their distribution center in Dhaka.
Assume that there are 48 weeks in a year.
The annual demand for X-Cola is very stable at 34954 bottles. The costs of X-Cola is $ 78 per bottle.
1) What is the optimal order quantity of X-Cola (in bottles)? Round your answer up to the nearest
integer.
2) Using the order quantity from Part 1 (rounded value), how many weeks are there between each
optimal order quantity of X-Cola? Write your answer with two decimal numbers.
Based on the exceptionally stable demand for X-Cola, you are assuming that demand is deterministic in
your model. What are the estimated annual costs of DeliCola for this policy? If needed, use the rounded
values from Part 1 and 2. For, annual pipeline inventory cost, keep in mind that DeliCola only pays for the
goods when the shipment arrives at their distribution center.
3) Find out the annual purchasing, annual pipeline, annual ordering and annual average cycle stock
inventory cost. Round your answer to the nearest integer.
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LEARNING OUTCOMES
➢ Classify inventories, distinguish between various types of costs (ordering costs, holding costs, shortage
costs), and recognize their significance in inventory decision-making.
➢ Calculate EOQ, understand its assumptions, and appreciate its application in minimizing total inventory costs.
➢ Analyze the sensitivity of EOQ to variations in factors such as demand, holding costs, and ordering costs.
➢ Calculate EOQ taking into account all-time discounts, and optimizing order quantities to consider discount
opportunities.
➢ Calculate EOQ considering one-time-only discounts, recognizing the impact of discount structures on optimal
order quantities.
➢ Analyze situations where backorders are planned and calculate EOQ considering the costs and benefits
associated with planned shortages.
➢ Apply EOQ principles in optimizing inventory levels, balancing costs, and ensuring efficient supply chain
operations.
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Any
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Thank You
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