Using Spreadsheet Modeling to Teach Exchange Curves (Optimal Policy Curves) in Inventory Management

ABSTRACT Inventory management is widely researched and the topic is taught in business programs across the spectrum of operations and supply chain management. However, the concepts are notoriously difficult for students to practice once they finish school and become managers responsible for inventory control. This article explains the structure and details of an inventory management class module designed to bridge the gap between learning inventory management theory and applying the learning to practice. Through an active learning exercise, groups of logistics management graduate students in two sections of an introductory inventory management class (in‐residence and online) are taught the exchange curve concept, introduced to its use in practice, and given a tool for implementing this learning in a variety of practical scenarios. The exercise is valuable as it is well suited for students with a limited math background because it allows the exchange curve concept to be taught and demonstrated without presenting complicated mathematics. A three‐tiered assessment of the exercise reveals its effectiveness in meeting the goals of providing an engaging and interesting use of learning time and giving the students an in‐depth practical understanding of the exchange curve concept. The exercise is designed to be equally useful for application in an undergraduate class.