Question

Comment on the following statement: “Inventory planning models are useless because the model assumptions do not always fit real world situations.” First, state if you agree or disagree with the statement, and then explain why.

Answer 1

Yes I agree with the statement that the Inventory planning models are useless because the model assumptions do not always fit the real world situations.

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Explanation:

Models are the representations of reality, not the actual reality therefore they can never be expected to exactly fit the real world situations.

With respect to the statement mentioned above, it is true that inventory planning models are not accurate because they are basically the simplications of real world scenarios and thus do not take into consideration the complexities and contingent factors of real world and are mostly based on rigid assumptions which do not apply in each case.

Most of the inventory planning models consist of one product formula as that presented by EOQ model which cannot be applied to businesses with multiple products as the EOQ system does not allow interaction between the multiple products . Moreover most of the inventory planning systems although perfectly explained but cannot be actually maintained manually.

Moreover the recorded inventory reflected by inventory planning models do not reflect the actual inventory and that is the cause of over stocking and under stocking problem that is faced by the most businesses today.

Therefore it can be concluded that inventory planning models provide just subjective view of the real world situations.

Thus the data obtained from inventory planning models are useless because if they would have fit the reality then there would have not been the problems of Over Stocking and Under Stocking leading to blicking up of capital or Shortaged respectively.

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Thank you dear student... Hope I explained well...

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