Inventory Plan at Varun Water Technologies
Prerequisite Conceptual Understanding
- • Jay Heizer, et al., “Chapter 11: Inventory Management”, Operations Management, 9th Edition, Pearson Education, 2008
This caselet enables a discussion on the concept of Economic Order Quantity (EOQ) in Operations Management. Varun Water Technologies (P) Ltd. (VWT), located in Bangalore, a successful wholesale distributor of water purifiers and accessories had been purchasing the purifiers from a single manufacturer in China. Within two days of receipt of orders, the products were delivered to the retailers based on the stock availability. In case of stock unavailability, the retailers approached other distributors for the products resulting as a loss of business for VWT. To put a full stop to this problem the founder of the company Aditya Varun (Varun), wanted to implement and follow an effective inventory plan. However, Varun was still in a dilemma as to how much to order and when to order.
Expected Learning Outcomes
- • Economic order quantity and its use for independent inventory demand
- • Reorder point and safety stock
- • How EOQ will be useful for VWT
- • Various costs involved in managing inventory
- I. Develop an inventory plan to avoid business loss at VWT.
- II. Discuss Reorder Point and total costs.
- III. Discuss how to address demand that is not at the level of the planning horizon?
The Teaching Note follows the specific Teaching Plan [Annexure (TN)-I]..................