Explain how a leader in operations could use the following two charts to develop and execute inventory strategy: https://d2vlcm61l7u1fs.cloudfront.net/media%2Feb1%2Feb181a4e-b7c9-40a9-8ecc-60ec3875af5f%2FphpJQoLE8.png https://d2vlcm61l7u1fs.cloudfront.net/media%2F7c8%2F7c8b5de5-f1cb-4a15-b406-ca8e29ac9cd2%2FphpLSUfz0.png

Explain how a leader in operations could use the following two charts to develop and execute inventory strategy:
https://d2vlcm61l7u1fs.cloudfront.net/media%2Feb1%2Feb181a4e-b7c9-40a9-8ecc-60ec3875af5f%2FphpJQoLE8.png
https://d2vlcm61l7u1fs.cloudfront.net/media%2F7c8%2F7c8b5de5-f1cb-4a15-b406-ca8e29ac9cd2%2FphpLSUfz0.png

 

Solution

From the first chart, we can say that at lower values of fill rate, the lower reorder size (i.e. more frequent reorders) yields lower inventory holding cost. But as we want to achieve high fill rate, say, 98% to 99%, the gap of inventory holding cost for lower and higher reorder size diminishes. For example, near to 100% fill rate, 80