Question

Inventory analysis mostly involves quantitative factors and not subjective ones.

Agree or Disagree?

Answer 1

Yes. I do believe that inventory decisions, especially given the current business and technological landscape are mostly quantitative and not based on subjective factors. Not only does it allow the company to make use of standard practices and policies while performing its functions, but it also makes sure that the management systems can make use of compatible industry-standard software for seamless integration between the warehouses, the suppliers, retailers, and even the end-users. Now, the techniques we select are based on creating a balance between holding cost and cost of ordering the items such as delivery. We need to make sure that we hold enough to feed the input, some level of buffer stock to deal with uncertainty, and not any higher than that value because the consideration would then incur a high holding cost.

The decisions are also quantitative because of the fact that a single framework or policy can be tested, set, and implemented thoroughly throughout the supply chain prices, especially through the use if organization-wide ERP systems, allowing seamless integration between all functions. Having subjective criteria serves no purpose to our end goals of cost minimization and therefore, we do not include subjective factors.

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