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Block 7: Management science methods, Dilemma: - Coggle Diagram

- - - - Holding costs: Costs tied to storage, capital, and obsolescence risks.
      - Order costs: Costs of placing and processing an order.
    - - Assumes steady demand, which is often unrealistic in dynamic markets and with new product launches that have no historic data (Apple with launch of iPad and iPhone and with the eMate) May not account for sudden demand fluctuations
      - Variable holding costs that are accurately estimated but there are costs for this so estimates may not be accurate for each item
  - - - High-end restaurants preparing meals only upon order.
      - Factories minimizing storage by producing parts as needed.
    - - Vulnerable to supply chain disruptions due to low inventory levels.
- - - - examples: Central heating can be turned on or off, thermostat settings can be changed remotely. Use of location data (e.g.: smartphone tracking can locate where you took the photo).
- - - - Over time, it may Deteriorate or be damaged
    - - Unhappy customers if they wait too long + Lose them as a result
    - - Data may become: Corrupted, lost or obsolete
  - - - May hide problems with process
    - - pressure on staff and so reduce quality
    - - Databases need constant management like updating security
  - - - Requires storage space.
    - - Areas for waiting
    - - Memory capacity + secure and/or special environment
  - - - Waste of costumer time
    - - Costs of set-up, access, update and maintenance
    - - Ties up working capital + Incurs high administrative and insurance costs.
- - - - specified Inventory is necessary for smooth operations.
        
        stock outs avoided + minimum average inventory levels
        held.
      - Focus on minimizing ordering and holding costs.
    - - Inventory is wasteful and should be minimized or eliminated.
      - Focus on synchronizing operations and reducing waste.
  - - - Steady and predictable demand.
      - Accurate estimation of holding and ordering costs.
        
        Estimates may not be accurate reducing the value of the outputs
    - - Processes can be synchronized for efficient flow.
        
        External disruptions may disrupt flow
  - - - Increased/decreased demand
    - - Process changes, new supplier partnerships
  - - - Cost efficiency through inventory control.
    - - Reducing waste, lead times, and improving quality.
  - - - Uses formulas to determine optimal order quantity.
      - Balances holding and ordering costs to minimize total cost.
    - - Advocates for "Just-in-Time" (JIT) production and delivery.
      - Aims for continuous flow with minimal inventory.
  - - - Narrow focus on costs, ignoring other operational factors.
      - Limited by demand variability and inaccurate cost estimations.
    - - Requires significant process coordination.
      - Susceptible to external disruptions (e.g., supply chain delays).
  - - - Simplifies inventory management.
      - Reliable method for cost control when demand is stable.
    - - Improves flexibility and responsiveness to demand.
      - Reduces operational costs by eliminating waste.
  - - - Works well for stable demand items (e.g., office supplies).
    - - Common in industries requiring high-quality production with low inventory (e.g., automotive manufacturing).