ASSIGNMENT

Submitted To:
Sir Shafiq Gul
Submitted By:
Abdul Khalil
Umair Nadeem
Registration no:
SP18-BBA-001
SP18-BBA-014
Course:
Marketing Management
Date of Submission:
15-05-2020

COMSATS UNIVERSITY ISLAMABAD

ATTOCK CAMPUS
Introduction of Centralize and Decentralize Inventory
System
Centralize Inventory System
A centralized inventory having fewer warehouses, requires a less complicated
infrastructure, and less or no duplications of equipment, warehouse staff, managers,
and bills such as rent and utilities. Fewer bills and fewer employees to pay mean
that you can put more money toward other business ventures, such as marketing.
A centralized base of operations is most beneficial if warehouse is centrally located
among your customer locations. When it is, transportation can be handled
efficiently because a single truck can be routed to deliver goods to multiple
customers in one go.
Then the inventory services all customers, orders to suppliers to restock your
inventory will be larger and will benefit from the discount that often come from
buying in bulk quantities and receiving only one shipment.

Decentralize Inventory System

A decentralized inventory arrangement allows for faster delivery times to customers
if you have a lot of customers spread out over a large. It can also improve customer
service because local customers might enjoy picking up their order versus having it
shipped.
Transportation costs between centralized and decentralized inventory tend to
balance out, though, since although you’re shipping things shorter distances, you
have to make more shipments more often. If geographical barriers such as oceans or
mountains separate your customer localities, however, decentralized inventory
locations will ultimately be less expensive.
Having decentralized inventory also allows you to respond better in emergencies
because all of your inventory “eggs” aren’t in one “basket,” a fire or natural disaster
at one inventory location won’t be as devastating as a disaster at a centralized
warehouse that services all of the customers.
Identify company local or foreign who uses centralize or
decentralize inventory system
Amazon.com is using the centralized inventory system for its operations. Because,
a centralized inventory is a very common method for online companies to use for e-
commerce ventures. The company has a "face" on the website that allows users to
order products. Company activity takes place at the centralized inventory location,
where the products are gathered and shipped based on orders.

Give your opinion that which system is better and why?

I think the centralized inventory system is better than the decentlized because in this
system the operation cost is low, retailer can gain higher margins and customers
will enjoy lower prices. Due to centralized inventory system the company will more
focused on providing the better customer service. One of the primary benefits of a
centralized inventory system is good channel management. If a business has
multiple channels to sell through, include a physical storefront, website, distributor
and satellite branch, a centralized inventory can help meet order demands for all
channels more effectively than several storage units spread out across multiple
locations. If the company wants to shut down an old channel or create a new
channel, the process is easy and cost-effective with a central inventory already in
place.