system analysis and design

Q2 [30 points = 7 marks]: A huge retail store must carefully manage its inventory levels. Stock- outs (where there is none of an item on a shelf) can cause missed sales, while too much inventory costs the company money in storage, ties up capital, and carries the risk of the products losing value. To balance these requirements, the store has chosen to use just-in-time ordering. To accomplish this, reorders are automatically generated by an information system (called the reorder system). Each item has a floor value, which is the fewest units of an item that should be in the store at all times, as well as a ceiling value, which is the maximum number of units that can be stored on the allocated shelf space. Vendors are required to commit to delivering product in either two days or one week. For vendors of the two-day plan, the reorder system calculates the amount of product purchased by customers in the past week, doubles the quantity, and then adds to the inventory floor. The quantity on hand is then subtracted. This is the desired order quantity. If this quantity added to the current inventory is greater than the ceiling, then the order quantity is reduced to the ceiling value less on-hand quantity. If the desired order quantity is greater than the sales for the previous month, a special report is generated and provided to management and the order must be approved before being sent to the vendor. All other orders are automatically placed with the vendor. However, if a product experiences a stock-out, an emergency order is automatically generated for the ceiling amount or the quantity sold in the last month, whichever is less. For vendors on the one-week plan, the reorder system calculates the amount of inventory sold in the last two weeks, doubles the quantity, and then adds to the floor to create the desired stock level. If this level is greater than the ceiling, the desired stock level is lowered to the ceiling and a report is generated for management to determine if more space should be allocated. The on-hand stock is subtracted from the desired stock level, yielding the desired order level. If the desired order level is greater than the number of units sold in the last two months, a special report is generated and provided to management and the order must be approved before being sent to the vendor. All other orders are automatically placed with the vendor. However, if a product experiences a stock-out, an emergency order is automatically generated for the ceiling amount or the quantity sold in the last month, whichever is less. Present this logic in a decision table. Write down any assumptions you must make