Question

(b) explain how increasing or decreasing the reorder point, reorder quantity, product prices, number of employees and work shifts, batch sizes at different resources, and order sizes for each type of product impact queuing for each of the product types.

(c) Lastly, explain how changing order frequency for each product type, number of machines at each resource and capacity allocations at impacts queuing at different stages for each product line.

Answer 1

Basically, The reorder point is the level of inventory which triggers an action to replenish that particular inventory stock. It is a minimum amount of an item which a firm holds in stock, such that, when stock falls to this amount, the item must be reordered. It is normally calculated as the forecast usage during the replenishment lead time plus safety stock. Therefore the reorder point for replenishing the stocks occurs at that level when the inventory level drops to zero and because instant delivery by suppliers, the stock level bounce back.

Whereas the reorder quantity is the quantity of the order that is to be placed on a new purchase order for the particular item. The ordered quantity or the number of units needs to be optimum taking into account the various factors like cost of order, cost of transportation, carrying costs, etc. The reorder quantity is the quantity which, given the normal usage, provides the best balance between the various factors like quantity discounts, freight, storage costs, and working capital requirements.

Now if we talk about the queuing of product, it means the amount of time it takes for a person, signal, or thing to be attended to is called queue time.

In general definition, queue time also includes the time before work that adds value to a product is performed.

Now , we understand first, how reorder point impacts queuing for each typre of product:

As we just studied the meaning of reorder point above, it ensure to replenish the stock levels when quantity of the stock reached certain limits. In other words, when a certain stock reaches at lesser quatities which are available with the seller, then it should be ordered again so that customers or buyers dont have to wait for that partilcular product, whicn in turn decreases the queuing for the product.

Therefore, the quantity which is ordered again after selling the available stock is termed as reorder quantity and this quantity is ordered keeping in mind the demand and nature of that particular product. All these stock levels helps in decreasing the ques for a product so that the consuers dont have to wait for the product.

If a product which is in regular or very high demand is available at all the times, then there will be no quues for the product.

On the other hand, the prices of the product also play a vital role in demand and que for the products. If the prices are too high, then it may impact the demand and if the prices are too low, then it may impact the profitability or unwanted demand for a particular product.

Number of employees and their work shifts also impacts ques for product, because each and every where, we need man power and personnel resources who can deal and control the consumers in their daily dealing. If a person is efficiently dealing over the counter with the consumers, then there may be less chances of que at the counter.

Order size and Batch sizes represents the quantity of the stock which is ordered in one order or in one lot. More the quantity, lesser will be the cost, since any order may consists of transportation cost, labour cost and other costs too.

B:) Order frequency means how often the order is placed with the supplier or how often the consumer purchase a particular product. Frequency of ofder effects the queing of prodcut at different stages of production. Products such as daily routine basic prodcuts are ordered or bough frequently and even on daily basis.

Every prodcuct which is produced require some machines through which it is produced and these machines decides the production levels and supplying capacity. More the number of machines, there will be more production and all this is inter conneced with demand for that product which is going to be produced.