Question

Ellis Company has stores in Japan that it has to manage carefully in order to maintain proper inventory with very little space for excess. It wants to have enough to keep shelves stocked but does not want to lose money by renting a larger location. Which of the following control functions is in effect?

a) Inventory control
b) Cost control
c) Space management
d) Operational efficiency

Answer 1

Ellis Company is exercising inventory control in managing its Japanese stores to balance product availability and space limitations. This mirrors the stratagems of Amazon, which uses technologically advanced warehouses to achieve cost-efficiency and maintain control over its extensive inventory.

Step-by-step explanation:

The function in effect for the Ellis Company as it manages its stores in Japan is inventory control. Inventory control is crucial for a company like Ellis which operates in an environment where storage space is limited and costly. With the challenge of keeping shelves stocked without incurring unnecessary expenses on a larger location, effective inventory management ensures that there is just enough merchandise to meet consumer demand without overstocking, which could lead to increased rental costs.

This scenario parallels the strategy of Amazon, which, instead of costly retail locations, uses highly efficient and computerized warehouses in low-rent areas to manage its vast inventory. These warehouses enable the company to keep costs down while still fulfilling customer orders promptly. By using economies of scale and technological advancements in its warehouses, Amazon maintains operational efficiency and strong control functions over its inventory.