Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be a minimum of 300 words in length, and is due on Sunday. By Tuesday, you should respond to two additional posts from your peers, 75-150 words.
We know that EOQ and JIT are both important methods in Inventory Theory. Please read this example on EOQ vs. JIT (https://michelbaudin.com/2015/02/23/eoq-versus-jit-explained-through-coffee-beans-and-raspberries/) and comments on the pros and cons of either approach. Then give one example in real world application for either approach.
There are pros to the Economic Order Quantity approach because you are able to buy items in bulk and save money on shipping costs. This is nice because the items you are going to be using can be bought in bulk at a cheaper price. The con to this method is that you will have money tied into the products before you use them. You also have to be able to support the space required for all of these items. If you buy too much it may take up too much space in your household.
The pros to the Just-In-Time approach include the fact that you get the item you want in the quantity that you want it right then and there. You also do not have to worry about the space in which you need to store the items. The cons of this is that you have a shelf life before the product goes bad. You will have to buy the quantity that you will be able to use in a short period of time.
A real world example of the EOQ approach is buying items in bulk. When an organization has an item that has a long shelf life such as jeans or shirts they can order items in bulk because they will still be able to keep those items for sale in 6 months to a year. A real world example of JIT approach is ordering fruit and vegetables for a store like Publix or Kroger. They will need to sell the item in a certain amount of time or it will spoil and they will lose their money.
This weeks’ topic on both Economic Order Quantity (EOQ) and Just In Time (JIT) are important methods in inventory management. Our studies note Economic Order Quantity is “The order quantity that minimizes the annual holding cost plus the annual ordering cost” (Anderson, et al., 2019). It is also a model that applies “when the demand for an item shows a constant, or nearly constant, rate and when the entire quantity ordered arrives in inventory at one point in time (Anderson, et al., 2019). Just In Time is “a philosophy of continuous and forced problem solving that drives out waste (Quizlet, 2019). The pros of Economic Order Quantity (EOQ) is the more products that you order the cheaper it becomes for the higher quantities. A pro to Economic Order Quantity (EOQ) is if you have to order more than the usual amount of inventory you may run into a problem with housing and storage of these inventory items. The pro to Just In Time (JIT) is you always have the most accurate number of products available and at your disposal when you calculate your inventory holdings. A con of Just In Time (JIT) is you will never have a surplus of these products and if there is a shift in demand you may miss out on potential sales and various other opportunities. An example of Just In Time (JIT) is a newspaper that is either sold during that day or immediately not sold within a given period of time. A newspaper is inventory that cannot be carried in stock for longer than one day at a time, after that the information becomes obsolete and unusable. Therefore, a daily paper cannot be sold the next day which makes it a daily single period inventory item with Just In Time (JIT) inventory availability (Anderson, et al., 2019).