Gabler Trucking, Inc. is a global company that is involved in the warehousing and distribution business. It has chain solutions that utilize inventory management systems such as fixed order quantity or fixed interval inventory. The company, therefore, uses the economic order quantity model to assist its clients in ascertaining and managing minimum stock levels or re-order points. The company’s distribution focus has shifted to the new time-based inventory replacement techniques.
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The objectives of the techniques are to eradicate surplus inventories, offer high-quality products with no defects, and dispatch small and regular replenishment quantities (GABLER’s Warehousing and Distribution, 2012).
The firm has inventory issues such as re-order costs and stockout costs, among others. The company has to create a balance between the costs of regular re-ordering and outflow of holding stock. It can overcome the challenge by adhering to the principle of EOQ. The principle provides the rationale for centralizing stock holding. The stand-in order of the EOQ is placed when inventory levels drop to a preset re-order level.
One of the weaknesses of this system is that variable demand can lead to the creation of an inconsistent pattern of re-ordering. The periodic review method, however, can be utilized to eradicate the setback. The company has combined two inventory management methods to produce a hybrid system that allows a frequent review of order quantities (Couper and Mould, n.d.).
The system is appropriate for the business. Gabler Trucking, Inc. has spacious and convenient storage facilities. It has efficient temperature-controlled warehouse amenities.
Further, the management and workers of the company have developed positive work ethics that allows them to work together to streamline the flow of products (GABLER’s Warehousing and Distribution, 2012).
Additionally, the system enhances the setting of re-order levels such that just sufficient stock is held to cover up the lead-time for delivery. Therefore, it is an effective tool for helping the company to maintain stock in line with demand and sales trends. The system is also effective for improving stock turnover rates and helping to minimize wastage of inventory surplus. Besides, it helps the company to correct inappropriate decisions about disposal or discontinuance of different stock items (Silver and Peterson, 1985).
Couper, A., & Mould, G. (n.d.). The OR Society. The OR Society – Operational Research, at the Heart of Analytics. Web.
GABLER’s Warehousing and Distribution.(2012). GABLER TRUCKING, INC,. Web.
Silver, E. A., & Peterson, R. (1985). Decision Systems for Inventory Management and Production Planning (2nd ed.). New York: Wiley.