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EOQ & ABC
Vs
JIT
2
INDEX
S.NO TITLE PAGE.NO
Question number : 1
1 Introduction 3
2 Inventory control methods
2.1 ) Economic ordering quantity (EOQ) 4
2.2 ) Two bin system 5
2.3 ) ABC inventory system 6
2.4 ) Jest - in - time ( JIT ) 6
3 JIT verses Traditional methods
3.1 ) Finance 7
3.2 ) Timeline 7
3.3 ) Supplier 7
3.4 ) Wastage 7
3.5 ) Forecasting 8
3.6 ) Marketing Condition 8
3.7 ) Demand basis 8
3.8 ) Price Basis 8
3.9 ) Inventory Capacity 9
3.10 ) Continuously identify and correcting 9
All inventory problems.
4 Conclusion 10
5 Reference 10
NUMBER OF WORDS : 1,263
3
1 ) INTRODUCTION
Inventory Control
In today's competitive market, Each company's facing the same problem " How much
inventory should I hold? ", The company must chose the middle point of the customer
demand and the satisfied cost of the company, for theyer inventory holding. So the inventory
control play a important role in the company. Inventory can be the most expensive and the
most important asset for an organization. Commonly the inventory should maintain 30% of
the industry.
This assignment analysis the compression between the classical inventory control
techniques/models such as Economic Ordering Quantity ( EOQ ), ABC System with the more
recent concept of Just-In-Time (JIT) related to lean manufacturing.
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2 ) Inventory Control method
2.1 ) Economic Ordering Quantity ( EOQ )
Economic order quantity is the order quantity that minimizes total inventory holding costs
and ordering costs. It is one of the oldest classical production scheduling models. The
framework used to determine this order quantity is also known as Barabas EOQ
Model or Barabas Formula.
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2.2 ) ABC System
The ABC analysis is a business term used to define an inventory categorization technique
often used in materials management. It is also known as Selective Inventory Control. Policies
based on ABC analysis:
A ITEMS: very tight control and accurate records
B ITEMS: less tightly controlled and good records
C ITEMS: simplest controls possible and minimal records
The ABC analysis provides a mechanism for identifying items that will have a significant
impact on overall inventory cost,[1]
while also providing a mechanism for identifying
different categories of stock that will require different management and controls.
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2.3 ) Two - Bin System
An inventory control system used to monitor the quantity of an item left behind. The two-
bin inventory control method is mainly used for small or low value items. For example, when
items in the first bin have finished, an order is placed to refill or replace these items. The
second bin is supposed to have enough items to last until the placed order arrives.
2.4 ) Jest - In - Time ( JIT )
An inventory strategy companies employ to increase efficiency and decrease waste by
receiving goods only as they are needed in the production process, thereby reducing
inventory costs. This method requires that producers are able to accurately forecast demand.
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3 ) JIT verses Traditional methods
3.1 ) Finance
On the financial basis of these two systems, EOQ and ABC is the standard level ordering
price and Quantity, In other words the EOQ is continuously maintain the midpoint of the
stock. ABC maintain the stock based on the preference and price. So these two components
getting more finance to maintain the level of management.
JIT is mostly not a regular or continuous process. It's process work only in a demanding
situation. So help to save the finance of the particular industry. Toyota using this method to
purchasing theyer raw material.
3.2 ) Timeline
EOQ and ABC is a long term process, it means the planning and operating time is too long
compare then the JIT. mostly the JIT operating time is short. It help to reduce or save the
operating timing of the company.
In other words, There is no possibility retrieve the mistakes, which was happen on the
project operating timing in the short term period. But in a long term period, It having sum
possibility to retrieve.
3.3 ) Supplier
EOQ and ABC is conceded the convenient of the supplier. It means the company before
preparing the planning of EOQ and ABC, They consulting with the suppliers about theyer
capacity of production and supply. Then the company decide the order level.
In JIT, It never gave that much important to the supplier, The purchasing order is small or
large they never conceded the supplier level of capacity.
3.4 ) Wastage
One of the main aim of the JIT system is to reducing the waste, It help to save sum few
important component of the company, like money, Time, Over production, inventory and
etc...
But in the EOQ and ABC system never gave that much important to reduce the wastages
level of the company.
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3.5 ) Forecasting
" JIT is a goal, not a concept"
-: David Hutchins
Just in time is not based on the forecasting plan or ides, Because it prepared to fulfil the
temporary need of the company.
EOQ and ABC is perfectly based on the forecasting plan. It deciding the future order level
based on the forecasting planning results.
3.6 ) Market condition
The consideration of market condition, in the sense, The market condition is not a stranded
one, It may change at any moment, the system should be flexible and automatically fix with
the market condition.
Based on this statement EOQ and ABC system never having the flexibility. JIT is more
flexible with the market condition.
3.7 ) Demand basis
Demand is not a stranded one, It may increase or decrease at any moment, the company
inventory system should be able to face the changing demand.
Based on the EOQ and the ABC system, the inventory level is a pre-planned one, It
having low possibility to change. But JIT is more flexible to face the demand.
3.8 ) Price basis
Price in the sense, The price purchasing raw-material, Sum times the raw-materials price
may increased too high, on that time the company should decided the ordering level based on
the financial level of the company.
ABC and EOQ ordering level is standard, it never conceded the price level. But, in JIT,
there is a possibility to change the order level based on the price.
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3.9 ) Inventory capacity
Capacity of inventory is too important one in the company, because the company placed
theyer order based on the capacity level.
JIT is following the "Zero inventory" system, So in this system there is no need to
calculate the capacity of the inventory. But EOQ and ABC system must need to calculate the
inventory capacity level. because these system follow the "Continues order" system.
3.10 ) Continuously identify and correcting all inventory problems
In this competitive market, Continues improvement is most important to the company.
EOQ and ABC is a long term process, If It once decided by the company, It may follow the
plan into long term, they never check or never worry about the mistake anything happen in
the middle of the time period. it's not good for the company.
JIT is the system help to make the company perform better ever. It help to continuously
identify and correcting all inventory problems.
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4 ) Conclusion
Each coin having two sides, Each things or concepts having merits and demerits. The
company, which one going to chose the system, It must conceded the both merit and dement
of the system. then they chose the right system which one was suitable for the company.
JIT system is mostly suitable for the hotel industryes.EOQ and ABC mostly suitable for
the Oil industry.
5 ) Referencing
WWW.UNIVERSITYOFBALTIMORE.COM
WWW. SMALLBUSINESS.CHRON.COM
WWW.MINDTOOLS.COM
"JUST IN TIME", 2001, BY DAVID HUTCHINS
"ADVANCED TOPICS IN JUST-IN-TIME MANAGEMENT", 1999 , BY
MARC J.SCHNIEDERJANS, JOHN R. OLSON
Supply Chain Management ( SCM )
2
S.NO TITLE PAGE .NO
Question Number 2
1 Introduction 3
2 Supply Chain Management (SCM) 4
3 Analysis of SCM 5
3.1 ) Purchasing process 5
3.2 ) Manufacturing process 5
3.3 ) Transportation process 5
3.4 ) Inventory process 5
3.5 ) Selling process 6
3.6 ) Service process 6
3.7 ) Global Supply chain management 6
3.8 ) Social responsibility 6
3.9 ) Business process 7
3.10 ) Measuring performance 7
3.11 ) Quality management 7
3.12 ) Information technology 7
4 Conclusion 8
5 Reference 8
NUMBER OF WORDS : 1,180
3
1 ) Introduction
Supply chain management (SCM) is one of the important management concept, which was
play a very important role in our day to day life. Supply chain management (SCM) is not
suppurate concept or practice, to introduce into the company. In other words it is a process
help to create chain/continuity of the existing process which was already applied in the
company.
SCM was not a over-hyped concept of the management, This assignment going to discuss
about this.
4
2 ) supply chain management (SCM)
APICS Dictionary when it defines SCM as the "Design, planning, execution, control, and
monitoring of supply chain activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics, synchronizing supply with
demand and measuring performance globally."
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3 ) Analysis of SCM
3.1 ) Purchasing process
Purchasing at the corporate level is too complex. Companies purchase large quantity of
products from the selection suppliers. In this section SCM help to maintain the Quality,
Delivery speed, Supplier flexibility.
3.2 ) Manufacturing process
Manufacturing is one of the complex and important thing in the company. Supply chain
management help to run the process in a sufficient manner. It help to plan or decide the
following thing which was play important role in purchasing. like Labor, Machinery,
Inventory, Capacity, location.
3.3 ) Transportation process
Transportation is the most difficult part of the company. SCM help to plan or decide the
Logistic/transport decisions. like Packaging, Containerization, Documentation, Insurance,
Storage, Importing and exporting regulations
The transportation mode of chose is dictated through the Supply chain management.
3.4 ) Inventory process
Inventory is the most critical part of the management. They should maintain the inventory
level which was satisfied the customer demand and also minimize the inventory cost. The
company should find the midpoint of the inventory level. SCM is one of the important
component should be conceded before deciding the midpoint.
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3.5 ) Selling process
Selling is the nearly final part of the product, This is the process going to decide the future
actions which was going to taken by the company for the further development. Sales contain
four important rules. Those are decided by SCM. Those roles are Right product, Right place,
Right time, Most efficient manner to satisfy the customer.
3.6 ) Service process
In an service sector SCM help to decide and maintain the productivity, capacity, Logistic,
Operation, value, Quality management, material management. So service sectors also depend
on the Supply chain management.
3.7 ) Global Supply chain management
Today the globalisation change the entire market condition. It open the door for all world
over company to compete. The company should face the globalisation problems. SCM help
to face these kind of problems. like Culture, Regulation, Currency, Technology, infrastructure.
3.8 ) Social responsibility
Social responsibility is latest topic which was introduced in the second century. After
introducing this concept, companies gave theyer focus on this. In this concept there are four
important concepts are used, those are Money, Nature, People, Product. The company should
maintain the equal level for each of this.
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3.9 ) Business process
The business process / planning of the company should be save the money and also the
timing. SCM make it possible to plan. In this part SCM help to plan the Designing, Managing,
Improving.
3.10 ) Measuring performance
The measuring process of the company is should be a clear one. Because it was going to
lead or help to decide the future activity of the company. The decision should be
Effectiveness, Efficiency, Adaptability. SCM help to decide these things.
3.11 ) Quality management
Managing quality in the modern global economic customer expect sum of the following
concepts. like excellent design, flawless manufacturing, Quick delivery, seamless transaction,
Innovation. SCM help to decide and measure the quality.
3.12 ) Information technology
The company management process should be flexible and adoptable one. Because the
modern world introduce new technologies day by day. the process should adopt this changes,
and improve theyer performance / process. Like computer applications, Internet, Mobile
applications. Then only the company able to face the day to day increasing globalisation
competition.
Finally based on this all analysis of the each management functions and deportments
through the "Supply chain management". These process are already existed in the company.
But not properly aliened. Supply chain management simply alien these process on these each
department.
So finally "Supply Chain Management is not a Over hyped Concept" of the
management.
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4 ) Conclusion
Based on this over all analysis, It show the Supply Chain Management process was not a
new concept to introduced into the company. It only a alien concept of the existing process of
the company.
5 ) Reference
WWW.UNIVERSITYOFBALTIMORE.COM
WWW. SMALLBUSINESS.CHRON.COM
WWW.MINDTOOLS.COM
WWW.WIKIPEDIA.COM
WWW. APICSDICTIONARY.COM
