The Apple Case The Miami bookstore orders MacBook Air from Apple and then sells
ID: 406064 • Letter: T
Question
The Apple Case
The Miami bookstore orders MacBook Air from Apple and then sells them to students and faculties. To provide a good customer service, it is critical for the bookstore to manage the inventory of MacBook Air well. Meanwhile, Apple also needs to manage the components of MacBook Air to ensure timely manufacturing once receiving customers’ orders from the bookstore.
1. What type of inventory management model should the bookstore use to manage the inventory of MacBook Air? And why?
2. Would Apple use the same inventory model adopted by the bookstore to manage the inventory of MacBook Air components? And why? How should Apple manage the inventory of MacBook Air components?
3. If Apple agrees to cut the order lead time in half, how would this change affect the bookstore’s inventory policy (i.e., when to order, and order size)?
Explanation / Answer
Answer 1:
Economic Order Quantity(EOQ) and Reorder level appears to be good for bookstore to manage the inventory of MacBook Air.
EOQ is the quantity where holding and ordering cost for inventory for organization is minimum and equal. Formula of calculating EOQ is as under-
= Under root of (2 * Annual requirement of inventory * cost per order / annual holding cost per unit )
Reorder level is the level of inventory where bookstore must place an order to Apple so that shortage or non availability of stock can be avoided.
Reorder level = lead time demand stock on order
Answer 2:
Since Apple is a manufacturer of books, it should ensure timely manufacturing of goods so that Bookstores demands can be met timely. Yes, Apple can use same model but in different way. The formula which Apple should use to manufacture MacBook Air should be as follow-
To start Manufacturing Level = Demand during manufacturing period - stock of books
This will help Apple to meet demand on timely basis.
Answer 3:
Yes, if Apple agrees to cut the order lead time in half , it will affect when to order and order size of bookstore. Actually formula mentioned above for reordering level will change and it will automatically change when to order and order size.
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