Solution

C H A P T E R

Inventory Control Models

6

TEACHING SUGGESTIONS

Teaching Suggestion 6.1: Importance of Inventory Control. Inventory control is important to most organizations. This chapter on inventory control can be introduced to students by a discussion of the consequences of too much and not enough inventory. The high cost of carrying too much inventory and the problems of stockouts, lost customers, and reduced market share as a result of too little inventory can be introduced at the beginning of this chapter. You may want to use a car dealership example. Should the car dealership stock every model and color? How many types of cars should be stocked? Teaching Suggestion 6.2: Examples of the Functions of Inventory Control. The importance of inventory to store resources, take advantage of quantity discounts, and avoid stockouts is discussed in this chapter. Students can be asked to give examples of how each of these important functions has been or can be used by organizations. An in-class discussion will help students realize the relevance of inventory control. Teaching Suggestion 6.3: Importance of Basic Inventory Assumptions. The assumptions of the basic EOQ model are important. The simple EOQ formula is a direct result of these assumptions. Students can be told that these assumptions will be relaxed in more complex models and inventory procedures. Teaching Suggestion 6.4: Setting Ordering Cost Equal to Carrying Cost Doesn’t Always Work for More Complex Models. This chapter determines the formula for the basic economic order quantity by setting ordering cost equal to carrying cost. Some students might get the wrong idea that this approach can be used with all inventory problems. Students should be told that calculus procedures can be used to determine the basic EOQ formulas and are needed for more complex inventory situations. Teaching Suggestion 6.5: Other Ways of Looking at Inventory Problems. In this chapter, students are shown how to compute the...