Question

In: Operations Management

While an inventory policy includes two decisions, use an example to explain what the two decisions...

While an inventory policy includes two decisions, use an example to explain what the two decisions are:

Solutions

Expert Solution

The two decision of inventory policy decision is -

1. Inventory includes all the items which help the organisation in providing support to inventory by supportive activity such as repair, maintenance and the customer's support by providing them with the final product. For example - a manufacturing company produces toothpaste for that they need inventory stock such as raw material like salt, flavour etc for that they need some supportive activity as without them manufacturing process is not possible operating supplies of them are important. They perform all these functions for the customer support that is to provide them with the final product, toothpaste.

2. The second inventory policy decision is that both the valuable source or the source of waste. For example - for toothpaste manufacturing company salt and flavour are waste as they are of no use but when the produces toothpaste with them they are the valuable sources.

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