INSTITUTO

TECNOLÓGICO Y DE ESTUDIOS SUPERIORES DE

MONTERREY

Class Activity No. 12:​ EOQ and JIT Models

Operations design and optimization laboratory

Prof. Myriam Sanchez

Team
José Antonio López A01372388
Hugo Flores Franco A01243949
César Vázquez Arzate A01370849

Due date: Mar/11/2019

1- Write down in a piece of paper the description of how this companies manage their
inventories.
Pawn Shops have to be careful to manage how many new items they accept as pawns,
either too little inventory or too much is bad. A pawnshop might have too little
inventory if, for example, it mostly buys jewels and gold that it resells or smelts. In
this case, the pawnshop is less interesting to customers, because it is mostly empty.
In other case, a pawnshop with a huge inventory has several disadvantages. If the
store is crammed with used athletic gear, old stereos, and old tools, the store owner
must spend time and money shelving and sorting items, displaying them on different
stands or in glass cases, and monitoring customers to prevent shoplifting.

2- What are the critical conditions of their “product/industry” to take into

consideration to maintain their inventory?
The better option for a pawn shop is a store with a moderate amount of good quality,
brand-name items arranged neatly in the display windows attracts passersby, who are
more likely to enter and shop. If items are attractively laid out in display cases and
shelves, the pawnshop looks more professional and reputable.
The pawnshop owner also takes into account their knowledge of supply and demand
for the items in question to determine if they think that they will end up selling the
items in, for example, $100 to a wholesaler or $250 to a pawnshop customer.

3- What are the higher costs (inventory related) that they must consider?
In this type of industry having a high inventory would increase the operation costs,
because that means that they aren’t selling their low price items of the inventory and
keep them in the storage. By having some expensive stuff in their inventory, that
would bring new customers interested in buying them or selling them something
similar in value.
4- Could you suggest something different to improve the way they manage their
inventories?
The pawns maintain their inventories in their stores, that is something that let them
have more control over their stock but as they sell different kind of things, they
maintain many dead stock. The pawns should avoid dead stock as this kind of stock is
difficult to sell.
The Pawns could also prioritize through ABC analysis as some products may need
more attention than others.

References

Campbell, Casandra (2018). ​Warning: You're Losing Money By Not Using These 8
Inventory​. Retrieved from Management Techniques
https://www.shopify.com/blog/inventory-management​, March 11th, 2019.

"Pawn Shops for the (Formerly) Rich". Wall Street Journal. September 28, 2010.
Retrieved March 11, 2019.