1.1 introduction The basic goal of inventory management is balancing the conflicting economics that don’t want to hold too much of stock. Inventory problems of greater or smaller quantities on hand is the reason behind business failures, production halts occur when manufacturer experiences stock out. When an item is not stocked according to the customer expectations, the retailer have to pay the penalty of losing its customer not only in this but also in future period of time. Wanke [2] studied that inventory management approaches are a "functions of product, operations related and demand related variables like delivery time, obsolescence’s, coefficient of variance in sales and inventory turnover" and that logistics managers may decentralize …show more content…
Inventory management should also contribute to realization of this fundamental aim. The inventory model for study is EOQ. The Economic Order Quantity model of inventory management is used to measure the optimum size of delivery and to choose the low cost deliverer [Coculescu 2007]. 1.2 Background of Study Inventory is an important variable which exists at all areas of product manufacturing, distribution and sales in addition to being a major portion of total current assets of many organizations. Inventory represents almost 40% of total capital of industrial organizations (Moore, Lee and Taylor, 2003). It represent 33% of assets of the company and as much as 90% of working capital, (Sawaya Jr. and Giauque, 2006). Inventory is a major segment of total investment, it is important that good inventory management should be practiced so that organizational growth and return is ensured. According to Temeng et al (2010), organizations historically have ignored the potential savings that occur as a result of proper inventory management, treating inventory as an important part and not as an asset requiring management. As a result, many inventory systems are based on arbitrary …show more content…
(1999).Advanced supply chain management: How to build a sustained competitive advantage. San Francisco, CA: Barrett-Koehler Publishers, Inc. Peter F. Wanke, Walter Zinn, (2004) "Strategic logistics decision making", International Journal of Physical Distribution & Logistics Management, Vol. 34 Iss: 6, pp.466 – 478 Kim, S. W. (2012). An investigation of information technology investments on buyer-supplier relationship and supply chain dynamics.Asian Journal on Quality, 13(3), 250–267 Gregory A. Graman, Michael J. Magazine, (2006) "Implementation issues influencing the decision to adopt postponement", International Journal of Operations & Production Management, Vol. 26 Iss: 10, pp.1068 – 1083. Malakooti, Behnam (2013). Operations and Production Systems with Multiple Objectives. John Wiley & Sons. [24]Morard, B., Balu, F.O.(2009), Developing a Practical Model for Calculating the Economic Value Added, Economic Computation and Economic Cybernetics Studies and Research, no. 3, ASE Publishing House, Bucharest; Coculescu, C. (2007), Comparative Evaluation of Parametric Optimization Methods, Economic Computation and Economic Cybernetics Studies
When analysing the actual distribution model, we find out several faults. Firstly, the inventory management is much decentralized and there are few formal replenishment methods. The regional warehouses managers just define the stock goals and call central warehouse daily with a list of restocking needs. This lack of control can lead to an excess of stock, creating a higher inventory cost, or to a situation of stock out. When the latter happens, regional warehouse manager must order the required product from central warehouse and in order to compensate costumers he offers a discount of 4.000lires per piece.
In the retail stores, managers are complaining of frequent stock outs even though the DC is full of merchandise, which is not moving enough through the supplier, DC, and retail stores. The inventory issue also ties in with transportation problems where accurate lead and delivery times are non-existent. The inventory turnover is not at its full potential because if the DC has merchandise yet the stores are stocked out, the inventory is frozen and will become obsolete.
Served as an expert consultant for all supply and logistics control matters at all locations within the Regional Supply Distribution Network. Directed teams in various supply chain and logistics activities. Reviewed operations and recommended strategies for improving efficiency of supply systems. Functioned as an Administrative Lead, providing expert-level domain and functional counseling, analysis, and support on complex programs/projects. Developed, coordinated, and implemented supply management procedures, programs, and directives.
The just-in-time (JIT) inventory system was developed in Japan after World War II, in an effort to control costs during fiscally challenging economic times (Waguespack and Cantor, 1996). The challenge that faced many Japanese companies in the post-War era was to find a way to meet the needs of customers and businesses while utilizing as few resources and as little capital as possible. The Japanese developed these set of techniques in order to control production, limit unnecessary products and reinvest the valuable capital left from the savings back into the business structure (Waguespack and Cantor, 1996). Much of the success of many Japanese corporations over the past four or five decades has been was linked to the principles of JIT (Chhikara and Weiss, 1995).
Inventory valuation is one of the factors that decision makers have to consider before making any decision in their business. They can know how different inventory assumptions affect the cost of good sold and the resulting net income. Inventory valuation is value a company allocates to its inventory in storage and when it is sold. There are several methods to calculate the inventory values to know how much they cost. These methods are specific identification, cost average, first in, first out (FIFO), and last in, first out (LIFO). Each method has its own advantages and disadvantages. Some of these methods are allowed under the generally accepted accounting principles (GAAP), while others are allowed by the international financial reporting standards (IFRS). This paper is going to highlight what each method means and the positive and negative impacts of using each method. Also, this paper will touch on why different companies prefer to use different methods when valuing inventory. The LIFO liquidation problem will be mentioned to help companies to know what the consequences of using the LIFO method will be. In addition, the dollar-value LIFO method will be discussed to help companies to alleviate the LIFO liquidation problem. Throughout this paper, the model of certainty and GAAP versus IFRS perspectives about inventory will be discussed.
The purpose of an inventory management is to meet ongoing demand forecast, prices and products. There are three types inventory management cycle inventory, seasonal inventory and safety inventory. The FAA regulates MRO company parts and inventory because when parts fail or when maintenance work is not done correctly people lives are at risk. The FAA also ground aircraft if the maintenance work or the parts fail, (MRO) providers are facing many challenges to forecast inventory in order to maintain competiveness, an applied parts method has been developed for inventory planning of parts in the aviation industry. There several different types of inventory wholesale, intermediate and user level. All aviation parts have local and national parts numbers required by the department of
In addition, at the time, the economy was doing great, therefore, using the push system to stock pile inventory was acceptable. However, during the dot-com bust of the 2000’s, its sales and the demand for its products greatly decreased. Unfortunately, during this time, Cisco discovered that it possessed an abundance of inventory, and, wrote off more than $1 billion in inventory. Consequently, the company learned that acquiring inventory in anticipation of market demand, and not factoring in the human element of its business increased its risks of failure. Obviously, Cisco wanted to meet its customer’s demands, however, the problem was that it held more inventory than what the customers were demanding. Nevertheless, afterwards, it knew that it needed to adopt a new, more efficient approach to inventory. Therefore, Cisco had to reevaluate its supply chain system and seek input from IT, customers, suppliers, and finance. Further, by including input from these sources, Cisco adopted the more efficient pull system. The pull system, is dependent upon producing smaller repeating orders. Rather than the push system, which relies on larger less repeating orders. Effective inventory management, when administered correctly, can reduce and keep the inventory to a more desired level. In addition, Cisco discovered that inventory management can reduce inventory levels, enhance cash flow and reduce overall
Inventory management is a method through which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle of the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seen more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company; effective and efficient inventory management is of critical importance.
... management ande-procurement: creating value added in the supply chain”,Industrial Marketing Management, Vol. 33 No. 2, pp. 219-26.
In today’s society; almost every organization either distributes, sells, or uses some type of material. Inventory control is a necessity to any of these organizations and is correlated
Given the core nature of the problem, it is important to take a look at the different concepts for more efficient inventory management practices in order to reduce the WIP inventory at all stages. Inventory management is one of the key concerns for manufacturing set ups in order to be successful. Manufacturers suffer from inefficient inventory management because of their business settings. Many operational and structural conditions cause inappropriate inventory management and inventory related problems surface every now and then.
Inventory management can enhance the efficiency in operation of the supermarket. Supermarket must ensure that the correct levels of inventory are being maintained throughout the store, and that merchandise is purchased at the best price point as possible. Holding too much inventory on hand generate costs like carrying costs. Whereas having too little inventory on hand makes customers dissatisfied and it leads to declining
As it has been stated before in the paper, good inventory and storage control interacts with different aspects of procurement cycle, to achieve best storage procedures. It is Important to understand customer needs in foodservice industry, to create menu items, which people are willing and able to buy, this will unable chefs to create standardized recipes, to make purchase specification and stock request. It is also important to control the sales, to ensure all of the items on the menu are selling and making profit for the business (Baldwin, Wilberforce, & Kapur, 2011). This will ensure there are no overstocked items and no spoilage in the storerooms. Controlling sales will also help with calculating pax stock amount needs. Once the stock request from the kitchen is done, stores manager job is to contact suppliers and purchase needed ingredients. Receiving is one of the closest related aspects to storage in the procurement cycle. Once the order arrives to the warehouse, receiver needs to carefully check the order and place it in proper storage quickly after receiving, to ensure the safety and freshness of the produce. A good store manager needs to ensure the entire inventory is properly positioned, labeled and has safe storage conditions, as well as rotating First In First Out to avoid spoilage(Biles
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
Inventory Management Systems: The procedure to overlook and control the orders, storage and use of parts that a company uses in the manufacturing process of the product it sells or in the case of merchandising company the product it purchases, holds in inventory and the products that it sells off, is called inventory management system. It is basically a method of supervision and control over the inventory of an organization.