DSCM304 INVENTORY MANAGEMENT JULY-AUGUST 2025

Description

SESSION	JULY-AUGUST 2025
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	III
COURSE CODE & NAME	DSCM304 INVENTORY MANAGEMENT

 

 

Assignment Set – 1

 

 

Q1. Provide a detailed explanation of the Economic Order Quantity (EOQ) Model. What are the assumptions, limitations, and practical applications in real-world scenarios of EOQ model? 4+6

Ans 1.

The Economic Order Quantity (EOQ) model is one of the most fundamental and widely used inventory management tools. It determines the optimal order quantity that minimizes the total cost associated with ordering and holding inventory. Developed by Ford W. Harris in 1913, the EOQ model helps organizations strike a balance between order frequency and inventory carrying costs, ensuring that stock levels are maintained efficiently to meet demand without overstocking.

Detailed Explanation of EOQ Model

The EOQ model operates on the principle of cost minimization. It calculates the quantity of

 

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Q2. Discuss the concept of ABC analysis along with its control policies. What are the advantages of ABC analysis in inventory management? 5+5      

Ans 2.

ABC analysis is a method of categorizing inventory items based on their relative importance in terms of value or usage. It applies the Pareto principle—often called the 80/20 rule—which states that a small percentage of items account for a large percentage of total inventory value. ABC analysis enables managers to focus control efforts on the most critical items that have the greatest financial impact on operations.

Concept of ABC Analysis

ABC analysis divides inventory into three categories:

• Category A: High-value items with low sales volume, representing around 10–20%

 

 

Q3. Explain the concept of the Basic Manufacturing Equation along with its components. What are the applications of Basic Manufacturing Equation? 6 + 4     

Ans 3.

Introduction

The Basic Manufacturing Equation is a key principle in production and inventory management. It describes the relationship between production, inventory, and demand within a manufacturing system. By quantifying these variables, the equation helps managers forecast production needs, optimize capacity, and maintain balance between supply and demand.

Concept of the Basic Manufacturing Equation

The Basic Manufacturing Equation is expressed as:

P = D + ΔI,

where:

 

 

Assignment Set – 2

 

Q4. What is inventory stratification, and what is its importance in managing inventory? What are the major factors considered in inventory stratification? 5+5           

Ans 4.

Inventory stratification is the process of classifying inventory items into different segments based on their value, demand, usage rate, or strategic importance. It goes beyond traditional ABC analysis by using multiple parameters such as profitability, lead time, and customer service contribution. The goal is to differentiate inventory policies according to the nature and impact of each product, thereby improving inventory efficiency and financial performance.

Concept of Inventory Stratification

Inventory stratification provides a data-driven approach to identify which inventory items add

 

 

Q5. What are the stages of the food product development process? Discuss some of the strategies for managing the volume of product development activity in distribution inventory.    6+4     

Ans 5.

Stages of Food Product Development Process and Strategies for Managing Distribution Inventory

Food product development is a systematic process that transforms new product ideas into commercially viable goods that satisfy consumer demand. It involves scientific research, innovation, and market analysis to design food products that are safe, appealing, and profitable. Effective inventory management during product development and distribution is

 

 

Q6. Write short notes on the following:

(a) Cycle Counting in Inventory Management

(b) Inventory Record Accuracy       5+5     

Ans 6.

(a) Cycle Counting in Inventory Management

Cycle counting is a systematic and continuous process of auditing inventory records by physically verifying a subset of items at regular intervals. Unlike annual physical inventory counts, cycle counting occurs periodically—daily, weekly, or monthly—depending on the importance of the items.

This method helps maintain inventory accuracy without disrupting daily operations. High-