Post-Flood Inventory at Hannah's Shop

Rating: 1.0 of 5. 1 vote(s).

Following a stock-room flood, Paul has to determine whether he should pay for a very expensive temporary storage unit close to the store or store most of his inventory further away at a central distribution center.

D: Keep inventory nearby at local storage facilities
D': Move inventory to the central distribution center.
B: Rapidly replenish sold inventory
C: Reduce facility costs (bottom line expense)
A: Ensure adequate quantities of inventory are on hand to maximize sales (reduce "out of stock SKUs") while reducing expenses
Click on the icons on the arrows to see assumptions and injections
In order to Ensure adequate quantities of inventory are on hand to maximize sales (reduce "out of stock SKUs") while reducing expenses I must Rapidly replenish sold inventory and in order to Rapidly replenish sold inventory I must Keep inventory nearby at local storage facilities. But, in order to Ensure adequate quantities of inventory are on hand to maximize sales (reduce "out of stock SKUs") while reducing expenses I must also Reduce facility costs (bottom line expense) and in order to Reduce facility costs (bottom line expense) I must Move inventory to the central distribution center.. I can't both Keep inventory nearby at local storage facilities and Move inventory to the central distribution center..
RelationAssumption(s)Injection(s)
D-D'inventory can only be stored in one place.Always true
B-D(3) We cannot effectively forecast customer demand.
(4) Distribution Center replenishment time is long due to shipping of only batch quantities.
(3) Create a more reliable process or program that attempts to determine sales quantities based on trends and recent sales.
(4) Ask if the Distribution Center can make an exception and ship small numbers of items
C-D'(6) There are no nearby storage facilities available for a reasonable cost.(6) All options have been looked at and all in close proximity are expensive.
A-B(1) Sales quantities are unpredictable.
(2) Out of stock SKUs are lost sales.
(1) Create a more reliable process or program that attempts to determine sales quantities based on trends and recent sales.
(2) Discount may be offered to consumer if they allow delayed shipment (costly)
A-C(5) Added expenses will negatively affect the bottom line.(5) Always true