This 14 page paper looks at the operational issues associated with inventory management in a supermarket, or any other business, determining the level of stock they should order and hold. Using the UK supermarket Morrison's as an example the paper starts with an introduction, objectives and methodology. The majority of the paper is focused on the issues related to stock ordering and holding and how costs associated with these can be minimized. The bibliography cites 15 sources.
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References 17 1. Executive Summary Morrisons is supermarket in a follower position, which needs to ensure it maximises its use of resources, One
key aspect of the supermarket industry is the need for control costs while still making sure that there is sufficient stock to satisfy customers. Morrisons seek to control inventory
costs with the use of central warehouses and orders that are based for short term forecast, resulting in highly variable orders. The paper looks at the way that optimal orders
may be determined and puts forwards the argument that the processes involved in economic order quantity, balancing the costs of ordering against the costs of holding stock, could help to
help cut the costs associated with incoming inventory fro the company. 2. Introduction In any business inventory management will be an important part of the way operations are managed.
This is especially true for supermarkets who effectively operate as intermediaries for the sale of goods; taking them from suppliers to sell to customers. This may involve some degree if
vertical integration, but the process is the key element. There are a number of issues that supermarkets face. Stock ties up resources and capital, there may be a high opportunity
cost where too much stock is held and capital is tied up unnecessarily, but if there is insufficient stock then there may be lost sales (Thompson, 2007). Ongoing problems with
insufficient stock could also result in customers shopping elsewhere (Kotler, 2003). Using a UK supermarket as an example, Morrisons1, there is the ability to examine the typical way that
stock control takes place, the problems which are faced by a supermarket and consider a potential solution(s) to those problems. Morrisons is a UK supermarket in a follower