Define inventory and discuss why inventories are maintained. What are the four Inventory Models?

Inventory is an asset that has been held for sale or any other future use. Inventories are the physical goods that are used in operations and include supplies, tools, parts, raw materials, and other physical materials used within an organization. Many different categories are maintained within the value chain. Managing inventory is beneficial since it allows the organization to meet its customers’ demands without having to wait for the production cycle to end. By managing inventory, orders are filled timely and more efficiently, enabling an organization to increase its profitability by meeting the needs of the customers (Collier & Evans, 2017).

Below is a description of the four inventory models:

1. Fixed Order Quantity system- this is an inventory model in which there is continuous monitoring of the inventory level where the maximum and minimum levels are corrected. The maximum can be replenished only when the level of inventory touches the minimum level of stock. The automatic reorder is integrated with the pre-fixed level of inventory within the system. An order is made automatically for maximum capacity once the minimum point that has been set is reached (Collier & Evans, 2017).
2. Economic Order Quantity Model- This model provides an order quantity figure where ordering and holding costs are minimized. Using this model, it is possible to calculate the optimal quantity to be produced or purchased as a strategy to reduce the costs associated with holding or ordering (Collier & Evans, 2017).
3. A fixed Period inventory system is a model in which the order for replenishing the inventory is sent after a specific period. Notably, the order quantity is usually different. The time could be either a month or a week. This model is appropriate for sellers to make unpredictable visits and make their orders for a product line or when buyers are making different orders to save transportation costs (Collier & Evans, 2017).
4. Single Period Inventory Model-This is a model in which seasonal or items for use one-time. In this model, the chance to order the right quantity is one, where any excess or insufficient amount leads to extra costs. In this model, the item does not have value once the time that it is needed expires. Examples of such things include Christmas trees and daily newspapers. In this model, demand is allowed to be stochastic and variable (Collier & Evans, 2017).

Best Regards,

Josh Briwder

Reference:

Collier, D. A., & Evans, J. R. (2017). OM6: Operations and Supply Chain Management. Centage Learning.

2:

What is the difference between yield management and revenue management for service-based organizations? How can service companies carry labor inventory? Could there be a just-in-time labor model? What would that organization look like?

In the service industry, yield management, and revenue management are two different tools that allow managers to maximize their earnings. However, these tools are various in some aspects. Yield management refers to making the maximum amount of revenue from a perishable inventory. In the service industry, yield management implies strategically controlling the inventory to sell the correct product to the correct customer at the proper timing, and for the right price. On the other hand, revenue management refers to the strategic maximization of revenue by encompassing all aspects of the delivery of a particular service.  For example, in the hotel industry, revenue management is concerned with associated elements such as laundry and food. Both tools are essential in increasing the revenue that an organization receives from the sale of its services (Collier & Evans, 2017).

Service companies can carry labor inventory indirect labor costs.  These are the costs that are incurred to the professional individuals who deliver the services that the company provides. The just-in-time model is a model in which raw materials are aligned directly with the supplier’s production schedule. The just-in-time model is based on existing orders.  However, it is impossible to have such a model for labor in the service industry. Such a model means that if a customer asks to be served with a particular cocktail, then the company will have to hire a mixologist there and then end the contract after making the cocktail. It is impossible to have such a model in the service industry. If an organization adopted such a model, it would imply that it would only hire workers based on demand for services. It is impossible to have a pool for workers who will be waiting until their services are required. In such a scenario, organizations would not deliver some of the services needed by the customers, and if the services are provided, the service will be of poor quality. For service organizations, labor costs might be high, but it also essential to consider the aspect of the quality of services offered to maintain the customers. Maintaining quality services for the customers creates customer loyalty and improved brand name, which helps service organizations in the long run (Collier & Evans, 2017).

Best Regards,

Josh Briwder

Reference:

Collier, D. A., & Evans, J. R. (2017). OM6: Operations and Supply Chain Management. Centage Learning.

3:

What metrics will you use in your paper? Why? What do they show to support your thesis?

For the final paper, the metrics that will be applied is the profit margin. The profit margin is the amount that an organization makes before any expenses have been accounted for. Virgin Airlines Company is one of the leading organizations globally in airline operations. In the recent past, the company has reported a decline in revenue, which has led to a reduction in the organization’s profit margin. With the emerging trends such as Covid-19, which have led to a general decline in flight operations, the use of this metric will help analyze the detrimental impact outsourcing of IT services has led to the company. Every company works to improve its revenue, and even amid a pandemic, the amount of income should be in line with the number of flights that the company is making. Using this metric, it will be possible to show how the revenues have been falling due to complaints from the customers on poor IT services (Collier & Evans, 2017).

The other metrics that will be applied in evaluating the customer care operations at Virgin Airlines will be Net promoter Score. This is a measure of the likelihood of a customer making a brand recommendation to other potential customers. If a customer is impressed with an organization’s products or services, they will recommend the products or services to other customers. This information can be pulled from different websites such as Tripadvisor.com. With this website, customers can post information about their experience with a particular brand and decide whether they will use the same services from the company in the future. Unlike a company’s website where the comments might be edited to attract potential customers, Tripadvisor.com is only aimed at advising future customers on the experience by customers. They can make their decisions based on the experience of past customers. The information about Virgin Airlines from tripadvisor.com will help evaluate the level of customer satisfaction over the past year, especially in IT services. The Airline industry is more about the quality of customer service, much of which is dependent on the IT department. By linking the level of customer service to the IT services’ effectiveness, it will be possible to evaluate the effectiveness of outsourcing IT services by the organization. (Collier & Evans, 2017).

Best Regards,

Josh Briwder

Reference:

Collier, D. A., & Evans, J. R. (2017). OM6: Operations and Supply Chain Management. Centage Learning.

write 3 replies according to the 3 posts, reply as you are a student. around 200+ words each