Reference no: EM133273000

Assignment - Difference Between Yield MGT and Revenue MGT Questions

Discussion one - Define inventory and discuss why inventories are maintained. What are the Inventory Models you learned in chapter 11.

Inventory is goods or materials that a company is accounting for and will either use it or sell it in the future. An inventory model that I learned from chapter 11 is single-period inventory model. This model is used for items that have a short selling season such as holiday decorations or perishable items. Another model that I learned about is the economic order quantity (EOQ). This model is used to determine the optimal number of units a company should purchase in order to meet demand and minimize inventory costs (Fernando, 2022). The procurement department in the company I used to work for had used EOQ. This inventory model assisted our procurement team by helping them determine the best amount of inventory we were to keep on-hand without running into issues of inventory shortages or overages. While we did have a steady demand for certain items, we would run into issues where we had a contract that was originally planned for fulfillment months ahead that suddenly needed filling. Typically, we would order extra of those items when the order was due to be filled, but unexpected requests for order fulfillment does happen and it caused us to be short on inventory and having to wait on replacements.

Discussion two - What is the difference between yield management and revenue management for service-based organizations? A revenue management system (RMS) consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide when to overbook and by how much, and determine what price to charge different customer (price) classes. These four components of RMS-forecasting, allocation, overbooking, and pricing-must work in unison if the objective is to maximize the revenue generated by a perishable asset. How can service companies carry labor inventory? I believe a portion of this answer is associated with Ordering costs or setup costs. Inventory-holding or inventory-carrying costs are the expenses associated with carrying inventory. Could there be a just-in-time labor model? That would be associated with temp jobs. Those temp jobs are mostly seasonal. Similar to when the holiday seasons begin, and consumer-based companies hire more people at that time. What would that organization look like? That company would look like Ranstad and Insight Global. Those two companies are known for hiring for short term positions.