Chapter Outline ‘SLOBAL COMPANY PROFILE: ANAZON. COM ‘The Importance of Inventory 500 ‘Managing Inventory Es Inventory Models 508 Inventory Modets for Independent Domand 506 Probab si tic Models and Safety Stock 519 jle-Period Model 524 Fixed-Period (P) Systems 525 > Inventory Management ‘a lndependent Demand ‘Dependent Demand NT & Lean OperationsGLOBAL COMPAMY PROFILE: AMAZON.COM INVENTORY MANAGEMENT PROVIDES COMPETITIVE ADVANTAGE AT AMAZON.COM | nen Jet Bos Spened his 1, You order thes ms {Spurn Sete rovluonary busines in i865, Sa computerin Seti ‘amazon.com was intended to sone yur dora 00% sono, od i bo avituat realer—no-4u7e Snail Inventory 9 warenouss, no cveread-~ fase Ue. datoon Contr, seh as he Justa bunch of computers taking orders anc Stems he authorizing oters to fil them, Things leary Coty, Kansas 2. The “ow mete” n iit work ot that way. Now, Amazon Boney acts your Sree Se ceterne wich srotters go where tot your hundreds of thousands of bins on metal ceaor yen shelves, in warehouses (seven around the U.S. and three in Europe) that have twice the floor space of the Empire State Building Precisely managing this massive Inventory has forced Amazon into becoming a world-class leader in warehouse management and automation, with annual sales of over $20 billion to £88 million customers. This profile shows ‘stocks millions of tems of inventory, amid 3. Rows of red lights chow | hich products are ‘ordered. Werkers move from ub to bub, rotieving an | itom ftom the shel above and pressing 2 button that resets the ight. This is hrown 29 a "pick-tosight" system. Ths system doubies the picking speed of manual operates and drops the ‘error rate to nearly zor, what goes on to accurately fill orders. When you place an order at Amazon.com, not only are you doing business with an Internet company, you ‘are doing business with a company that obtains competitive advantage through Inventory management. 4 Your ams are pt to | Setenmoagne ac See | ‘customers’ orders. When full, | aetna corre aa oe alos ne octane ent | Peete ports Ce ees oe Serer abe ie Reena cee es | are very expensive, | 4985. All throo items converge in chute and then Inside @ box. All the crates arve at a central point here bar codes are matched with ocdernumbecs to dotormine who gets what. Your three tems end pin a 3-foot-wide chute—cne of several thousand—ard ae placed into a cardboard box with a new bar code that dentiies your order Picking is caquenced to rocuce operator travel 6, ny lfts you've chosen are wrapped by hand, Amazon taine an elte group of git wrappers, each of whom processes 30 packages 7. The box is packed, taped, woighed, and labeled betore leaving the warehouse na ‘ruck. The Coffey plant was designed to ‘hip ae many a8 200,000 pisces a da. Aout 60% of orders are shinped vie the US. Postal Service: nealy eventing else goes tough United Parce! Service. £8, Your order arrives at your doorstep. In ‘ne or two days, your orders delivered, amnaan cow 499