Which method is most effective in maintaining customer service with minimal inventory in a dynamic demand situation?

The most effective method for maintaining customer service with minimal inventory in a dynamic demand situation is a centralized push system using time-phased logic. This approach allows for efficient planning and allocation of resources to meet fluctuating demand while keeping inventory levels low.

In a centralized push system, demand forecasts are developed and inventory is managed based on these projections, helping companies anticipate changes in demand ahead of time. By utilizing a time-phased logic, such as Material Requirements Planning (MRP), businesses can schedule production and procurement activities to occur just in time for when the inventory is needed, rather than holding excess stock. This proactive approach enables companies to react swiftly to changes in customer demand while minimizing inventory carrying costs.

In contrast, other methods may not provide the same level of responsiveness or efficiency. A system that strictly relies on Economic Order Quantity (EOQ) tends to focus on cost optimization rather than dynamically adjusting to fluctuating demand. Increasing production volume without a clear understanding of demand may lead to overproduction and excessive inventory. Similarly, a decentralized pull system with reorder points can be reactive and may not adequately respond to rapid changes in demand, potentially compromising customer service levels if inventory falls short.

Thus, the centralized push system using time-phased logic stands out as the optimal choice