Managing Inventory

Prior to beginning work on this discussion forum, read Chapter 11: Managing Inventory Throughout the Supply Chain.

From the end of Chapter 11, answer Discussion Question 6: The just-in-time (JIT) movement has long argued that firms should

• Maximize their process flexibility so that ordering costs are minimal.
• Stabilize demand levels.
• Shrink lead times as much as possible.
• Assign much higher holding costs to inventory than has traditionally been the case.

Using the economic order quantity (EOQ) and reorder point (ROP) formulas, explain how such efforts would be consistent with JIT’s push for lower inventory levels.