Managing Inventory: Dr. Pepper - Assignment Example

Inventory is one of the main driving forces on the ability of a company to generate profits and revenues. If a company is able to get inventory at the least cost possible and sell it at the highest possible price, it will then have a successful profitable operation.Dr. Pepper uses an inventory management system to oversee all its stock items and inventories. The system helps to keep the company’s business well organized. With proper tracking and management of inventory, it becomes easy for the company to know what it needs and in what quantities.

The company is also able to see the specific products that are moving and those that are selling slowly. The company’s system is also set in a way such that it is able to re-order certain inventory items, thereby ensuring that those items are never out of stock.Inventory models can be classified into deterministic models and probabilistic models. Deterministic models are models that assume zero uncertainties in demand and topping up of inventories and include the economic ordering quantity model, ABC analysis, and inventory turnover ratio.

A probabilistic model, on the other hand, acknowledges some degree of uncertainty (.Böhme, Deakins, Pepper, Towill 2014)Dr. Pepper uses an economic ordering quantity for its demand operations. This model enables the company to know how frequently to buy given items, when to buy them, and what the reserve stock should be. Dr. Pepper uses an ABC inventory model for its production operations. Through this model, the company is able to differentiate between high-level and low-level items, in terms of both value and quantity.Dr. Pepper uses unique 20-ounce label design bottles to package its products. Dr. Pepper ensures that its products adhere to the quality requirements of the customer, particularly in terms of the chemical composition, the physical properties such as capacity, and taste.