What are the aims of inventory management?
The aims of inventory management are the following: a) provide both internal and external customers with the required service levels in terms of quantity and order rate fill, b) ascertain present and future requirements for all types of inventory to avoid overstocking while avoiding ‘bottlenecks’ in production, c) keep cost to a minimum by variety reduction, economical lot sizes and analysis of costs incurred in obtaining and carrying inventories, and d) provide upstream and downstream inventory visibility in the supply chain.
What is MRP?
Material Requirements Planning or MRP is a computer – based inventory management system and a dependent demand technique that uses bill – of – material, inventory, expected receipts, and a master production schedule to determine material requirements. MRP systems have been installed almost commonly in manufacturing firms and also in other business field, even those considered small. The reason is that MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to provide each end item or result. MRP also provides the schedule specifying when each of these materials, parts, and components should be ordered or produced.
Effective use of dependent inventory models requires that the operations manager know the following: a) Master Production Schedule - what is to be made and when, b) Specifications or bill of material - materials and parts required to make the product, c) Inventory availability - what is in stock, d) Purchase orders outstanding - what is on order, e) Lead times - how long it takes to get various components.
The following article is according to Robert Jacobs,...
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...Graw – Hill/Irwin
Dorenkott, J. (2003). The importance of integrating POS. Ohio
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(May 30, 2010)
Heizer, J. & Render, B. (2004). Operations management 7th Edition. New Jersey: Pearson Education Inc.
Jacobs, R. & Chase R. (2008). Operations and supply management: the core. New York: McGraw – Hill/Irwin
Jay, B. (2000). Determining the correct service level target. Production and inventory management Journal 41, no.1
Lysons, K. & Farrington B. (2006). Purchasing and supply management 7th Edition. England: Pearson Education Limited
Parekh, N. (2007). Waterfall model explained. [online]. Available: http://www.buzzle.com/editorials/1-5-2005-63768.asp. (May 30, 2010)
Stevenson, W. J. (2007). Operations management 9th Edition. New York: McGraw – Hill/Irwin
...ory holding costs, ordering costs, and shortage costs, and have a classification system for inventory items.
Ebert Ronald J and Griffin Ricky W. (2011). Operations Management and Quality (8th edition) Business Essentials.(pp.128-132), Boston [Mass];London: Pearson.
Anybody who knows something about business had heard the term Just-in-time (JIT) inventory. It involves producing only what is need, when it is needed. The principle of Just in time is to eliminate sources of manufacturing waste by getting the right quantity of raw materials and producing the right quantity of products in the right place at the right time.(1) In this way, manufactures receive parts and materials “just in time” to meet the day’s manufacturing quota with hardly any extra.(3)
Russell, R. S., & Taylor, B. W. (2011). Operations Management: Creating Value Along The Supply Chain. (7th ed.). Hoboken, NJ: John Wiley and Sons, Inc.
When it comes to selling a product, one of the most important aspects to consider is how you manage the inventory. Typically, people do not think about how inventory can drive company costs and how much thought must be put into this topic. Businesses must consider product demand, lead time, holding costs, service levels, among many other variables. All of these factors will result in different methods of holding inventory and will determine how a business orders their materials.
Slack, N., Chambers, S., & Johnston R. (2007). Operations Management. Upper Saddle River, NJ: Pearson Prentice Hall. Retrieved on December 20, 2013 from SMC Learning Resources
In today’s operational management arena, there are certain expectations from a managerial aspect that must be met in order to be successful. A comprehensive look at the Space Age Furniture Company will show exactly what the Materials Requirement Planning (MRP) calculations are for this company at present time and then take the information given in order to properly suggest ways to improve the sub-assemblies. In addition, there will be an analysis on the trade-offs between the overtime and inventory costs. A calculation will be made on the new MRP that will improve the base MRP. This paper will also compare and contrast the types of production processing to include the job shop, batch, repetitive, or continuous, and determine which the primary mode of operation should be and exactly why. A detailed description on how management can keep track of the job status and location during production will also be addressed. Finally, there will be a recommendation on they type of changes that need to occur that will be beneficial to the company and at the same time add value to the customer. This paper will conclude with summary of the major points.
Nigel, S., Alistair, B.J. and Robert, J. (2011) Essentials of Operations Management, 2nd edn., Italy: Pearson Education Limited.
Slack, N., Johnston, R. and Brandon-Jones, A. (2011).Essentials of operations management. 1st ed. Harlow, England: Financial Times Prentice Hall.
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
...Syntetos, A and Boylan, J,E (2004) Inventory Management for Spare Parts, Conference paper : Second World Conference on POM and 15th Annual POM.
Slack, N., Chambers, S., Johnston, R., Betts, A.,(2009). Operations and process management: Second edition. Harlow: Pearson Education Limited
Slack, N. & Lewis, M. (2011) Operations strategy. 3rd ed. Harlow : Financial Times Prentice Hall.
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 from 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 seeing 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;
Inventory management involves planning, coordinating, and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and subassemblies, supplies and tools, replacement parts, and other assets that are needed to meet customer wants and needs (Collier & Evans, 2009). In order for business and supply chains to run smoothly, they must meet all the listed requirements for effective inventory management. Thus, inventory management must be managed wisely in order to be a successful an...