“Principles of Supply Chain Management

 

 

What three things you learned from the chapter.

Book: “Principles of Supply Chain Management: A Balanced Approach, 3rd Edition”

Chapter 7: Inventory Management.

The most expensive, sophisticated software package will not automatically result in anoptimal level of inventory for an electrical wholesaler.‘Optimal’means a high level ofcustomer service and inventory turns, but with low inventory investment. To achieveand maintain an optimal level, employees educated in the principles of effectiveinventory management must understand how to set certain parameters; then set themand keep them set right.

Objectives After completing this chapter, you should be able to

•Distinguish dependent from independent demand inventories.

•Describe the four basic types of inventories and their functions.

•Understand the costs of inventory and inventory turnovers.

•Understand ABC classification, ABC inventory matrix and cycle counting.

•Know RFID and how it can be used in inventory management.

•Understand the EOQ model and its underlying assumptions.

•Understand the Quantity Discount and the EMQ Models and their relationshipswith the basic EOQ model.

•Understand and be able to distinguish among the various statistical ROP models.

•Understand the continuous review and periodic review systems.

 

Sample Solution

“Principles of Supply Chain Management

One way to understand inventory is to separate it into two broad categories: dependent and independent demand. Understanding this difference is important as the entire inventory policy for an item is based on this. Independent demand is demand for a finished product, such as a computer, a bicycle, or a pizza. Dependent demand, on the other hand, is demand for components parts or subassemblies. For example, this would be the microchips in the computer, the wheels on the bicycle, or the cheese on the pizza. There are four main types of inventory: raw materials/components, WIP, finished goods and MRO.

earle’s famous “Chinese Room” argument that was discussed in Chapter 2 of How the Mind Works, was one of the most interesting arguments to display claims of artificial intelligence. Basically the claim as that computers can and will at least try to master the act of thinking. The argument was based upon how Searle sees himself in a room alone and is trying to follow and get on board with a computer that is that is responding to Chinese characters. However, Searle knows he is not able to grasp or understand any of it, yet he attempts to manipulate numbers and a variety of symbols in order to trick those outside of the room. His manipulation of such numbers and symbols, produces Chinese characters, which allows him to convince those outside the room that there is someone who can actually speak Chinese inside the room. Searle believes that though the computer appears to understand what is going on, in all reality it actually doesn’t understand it. It can be concluded that purpose of this argument was the refute the point that a computer can function on its own. Searle believes that if a man cannot understand Chinese even when he was manipulating numbers and symbols, then neither can computers. A computer is no human and can never be like one.

Pinker’s response to the “Chinese room” argument is reluctant. He says that Searle has stated nothing to do with something that can be scientifically valuable. And that Searle is merely stating about the word “understand”. In fact, it is talked about in abroad way, which isn’t too clear or concise. Pinker says that humans are filled with meat, while computers are filled with information. Humans need the right buttons to be pushed before he/she can accurately process information. Similarly, computers need the right information when processing in search for other information. Both need some sort of push in order to be successful and without that push humans and computers both cannot function and “understand”. Pinker feels that we can be just as unreliable as computers can be.

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