ASAD KHAN

KUBS – MBA – SCM – 2020

(INVENTORY MANAGEMENT)

AMAZON CASE STUDY

ANSWER TO QUESTION 1

AMZON.COM IS HUGE IS SIZE OF ITS EMPLOYEES AND ITS OPERATIONS, DUE TO THE INCREASING
DEMAND. USING THE DISTRIBUTION REQUIREMENT PLANNING, SETTING UP REGIONAL WAREHOUSING
AND MAKING SURE THE DELIVERY ITEMS (CUSTOMER DEMANDS ARE FULL FILLED AND DISPATCHED
ASAP), THE ORDERS SHOULDN’T STAY FOR LONG IN THE WAREHOUSES.

IT’S DIFFICULT TO CALCULATE THE RIGHT NUMBER OF WAREHOUSES REQUIRED FOR ITS NEEDS BUT IN
THE USA, AMAZON MIGHT NEED TWO WAREHOUSES PER REGIONS THAT MAKES ABOUT 108+ A FEW
EXTRA WAREHOUSES IN MAJOR SALES CENTERS SUCH AS NEWYORK, CALIFORNIA, & OTHER BUSY
STATES.

ANSWER TO QUESTION 2

SELLING THINGS ONLINE WAS THE MAIN IDEA OF AMAZON WHEN THE DOT.COM INDUSTERY WAS
BOOMING, THAT WAS THE MAIN IDEA OF JEFF BEZOS AND NOW AMAZON MOSTLY SELLS ONLINE. THE
AMAZON E-BOOKS STORE HAS VARIOUS ADVANTAGES AND DISADVANTAGES TO THE EXTENT OF MY
KNOWLEDGE RATHER THAN CONSULTING “GOOGLE BABA”

LETS START WIN THE CONS FIRST,

 TRADITIONAL BOOKREADING HABITS OF SOME OLD SCHOOL FOLKS LIKE ME DON’T PREFER
WATCHING SCREEN FOR READING MOST OF THE TIME.
 HUGE INVENTORY KEEPING COST THUS RESULTING IN THE COST FOR CUSTOMERS AS THE
CORPORATES DON’T NEED TO SACRIFICE THEIR PROFITS.
 BY SELLING ONLINE IN PDF MIGHT SACRIFIES THE “NEED TO PAY FOR THE BOOK“WHEN YOU
CAN GET IT ONLINE FOR FREE OR IN SHORT “GOOD QUALITY PIRACY ISUUE”
 ACOOUNT HACKS, DMISPLACED ORDERS, SYSTEMS PERFORMANCE, GLITCHES ARE SOME OF
THE MINOR SETBACKS ASWELL.

NOW COMING TO THE PROS

DOESN’T HAVE TO CARRY INVENTORY. NO IVENTORY NO KEEPING COST.

ORDER PROCESSING AND DELIVERY CAN BE OPTIMIZED TO “ON TIME DELIVERY” TO KEEP THE
CUSTOMERS HAPPY. CUSTOMERS GET HAPPY WHEN THEY GET WHAT THEY WANT AT THE RIGHT TIME.

NO HASTLE OF SHELFING, SHOWCASING, BOOK SHOPS.

DON’T NEED TO WORRY ABOUT THE DEMAND TO KEEP THE SUPPLY IN CHECK.
AMAZON CAN MAKE AND SELL MILLIONS OF COPIES WITHOUT THE HASTLE AND HEFTY COST OF
PRINTING AND DELIVERING. (ALL AT THE CLICK OF THE BUTTON).

ANSWER TO QUESTION 3

ABSOLUTELY NO, IT WOULD NOT BE WISE IF AMAZONS STARTS KEEPING ALL THE BOOKS IN STOCK.

A LOT OF PROBLEMS MIGHT ARISE DUE TO THIS ACT.

SOME OF THEM WOULD BE,

GOING BANKRUPT IN A SHORT TENURE DUE TO HIGH INVENTORY CARRYING COST, WAREHOUSING,
DAMAGES, INSURANCES AND THE LIST GOES ON. PLUS WE ARE TALKING ABOUT AMAZON MORE THAN
40 MILLION BOOKS. THE NUMBERS AND COSTS ARE SCREAMING “SUICIDE” FOR AMAZON.COM IF IT
KEEPS ALL BOOKS IN STOCK

ANSWER TO QUESTION 4

AMAZON LOVES CHALLENGES AND THAT’S WHAT THEY DID FOR THEIR EXPANSION OF BUSINESS, THEY
STARTED AS ONLINE BUT NOW, ALSO TURNED OVER TO TRADITIONAL ,PHYSICAL SELLING.
AMAZON.COM DIDN’T WANT TO WASTE A SINGLE OPPORTUNITY IN THE MARKET.

THE BRICK AND MORTAR WILL DO GREAT FOR THE OWNER(s) BY MAXIMISING THE PROFITS, MAKING
SURE THAT THEY ARENT MISSING ANY CUSTOMERS WHO PREFER THEIR PHYSICAL SELLING PRODUCTS
OR THE OTHER WAY AROUND.

THEY ONLY NEED TO CARRY INVENTORY OF THE BEST/MOST SELLING ITEMS/BOOKS/ETC.

WHILE CARRYING LESS INVENTORY FOR THE LEAST DEMANDED ITEMS, RESULTING IN LOW INVENTORY
CARRING COST.