Inventory and Warehouse Management – ABS IWM

Answer all five questions. Reflective answers and application to specific industry sectors are expected where applicable.

1.

Discuss key performance indicators (KPIs) used in inventory management. Choose a specific industry (e.g., retail, automotive, pharmaceuticals) and reflect on how these KPIs are prioritized and measured.

2.

Explain the differences between deterministic and stochastic inventory management. Provide an example from the automotive industry to illustrate how each type is applied.

3.

Using the Economic Order Quantity (EOQ) model, calculate the EOQ for a product with an annual demand of 10,000 units, an ordering cost of $100 per order, and a holding cost of $2 per unit per year. Explain the practical implications of EOQ in the context of e-commerce warehousing.

4.

Describe various types of warehousing and their roles in supply chains. Choose a sector (e.g., food logistics) and reflect on how warehouse type influences operational decisions.

5.

Discuss recent innovations in inventory management and warehousing (e.g., automation, IoT, blockchain). Reflect on their adoption and benefits in the fashion retail sector.

Case Study: Inventory Challenges at FreshFoods Distribution Ltd.

FreshFoods Distribution Ltd. is a mid-sized company based in Birmingham that supplies fresh produce to supermarkets and local stores across the UK. The company operates two main warehouses: one in Birmingham (central warehouse) and one in Manchester (regional warehouse). It deals with over 1,000 SKUs, including perishable fruits and vegetables, dairy products, and packaged fresh meals.

Over the past six months, FreshFoods has experienced growing operational inefficiencies and rising costs. Key issues reported include:

Frequent stockouts of high-demand items like strawberries and pre-packaged salads, leading to lost sales.

Overstocking of slow-moving SKUs such as exotic fruits and certain dairy products, leading to increased waste due to expiration.

Poor warehouse space utilization, with 30% of warehouse racks either underused or filled with obsolete stock.

Manual inventory tracking using spreadsheets, resulting in discrepancies between recorded and actual stock.

Ineffective replenishment policies, with inconsistent order quantities and reorder points.

A recent internal audit revealed an inventory turnover ratio of 4.2, significantly lower than the industry benchmark of 7.0.

The management team is considering the implementation of a Warehouse Management System and a revised inventory control policy. However, they are unsure of the trade- offs and best way forward.

Questions:

a.

Identify and explain the main inventory management challenges faced by FreshFoods. How do these issues impact overall operational performance?

b.

Recommend suitable inventory control techniques for managing both fast-moving and slow-moving items. Justify your choices with reference to the case.

c.

Management System (WMS) for FreshFoods. How could this system address the current issues?

d.

As the operations manager, outline a short-term and long-term action plan to improve inventory turnover and reduce waste. Include both process and technology-based solutions.