Decisions regarding stores and warehouse locations involve a complex range of issues that are unique to each business. Most storage facilities and location decisions are based on a combination of qualitative and quantitative analysis.
Qualitative analysis uses subjective judgment to analyze a situation based on non-quantifiable in-formation, such as potential markets for new products, forecast on possible risks that may happen, etc.
Quantitative analysis (QA) is a technique that uses mathematical and statistical modeling, meas-urement, and research to understand behavior. Quantitative analysts represent a given reality in terms of a numerical value. This may include the following:
- Cost analysis for the current premises and future predictions based on current premises
- Cost analysis for routine operations
- Current inventory performance measures: lead times, service levels, rate of stock turn, stock-outs in a given period and stock cover To get a big picture of current situation and future demands, organisation should combine both qualitative and quantitative methods so that useful information is achieved and well-informed decisions are made.
Reference:
LO 1, AC 1.1