Inventory management is a topic that has been captured the attention of academic and business communities for long time. Of the most important points that investigated by academicians and practitioners for decades is the selecting of the Economic Order Quantity (EOQ). As the name suggests, EOQ is the order quantity that minimizes total inventory cost. Despite the many variants of the EOQ that have appeared in the literature to fine tune it to reality, it still has limitations. A major one is that it does not take into account the hidden costs inherent in inventory systems. Some of these costs relate to sustainability issues including environmental, social labor, and economic effects. This research proposal considers some of these costs, referred to as the exergetic costs, and estimates them using the Extended Exergy Accounting, EEA, approach. Extended Exergy Accounting assigns equivalent exergetic values to capital, labor and environment remediation costs of a system. The analysis combines the classical exergy analysis with the sustainability factors, which are environment, labor and capital.
To make this proposal an enjoyable for readers and to assist them grasping the idea we would like to introduce, this proposal is organized as follows: Section 2 presents the most important literature review related to the topic of this proposal. Section 3 introduces Supply Chain Management including a brief background and definition of Supply Chain Management, objective and advantages. Then we followed by the Green Supply Chain Management and Sustainable SCM, respectively. In Section 4, we have introduce the term “Exergy” and how to link it into sustainability and inventory management. It has been followed by the Exergy Analysis and the ...
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...s “a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements” (Simchi-Levi, et al 2004, p1).
5.1 What is The Objectives of SCM?
The main objective of SCM is to increase the profitability of all the members and reduces their total cost. This task can be achieved by modifying and controlling all policies related to pricing, ordering of the optimal quantities and inventory management. Hence, the most important task of SCM is increasing of the inventory turnover by selling products faster which will improve the cash flow. Accordingly, the return on capital will be improved then reduces the pressure on the working capital.
Kuiper Leda lacks an effective Inventory Management to handle properly the increase in demand of stock and production. An inventory management plan would be capable of forecasting errors in production, client-required service levels, total lead time in manufacturing a unit or batch of the product, and demand priorities. Inventory control is a challenge currently because of the size of Midland Motor's order. In order to meet the demand the company needs to increase the inventory which increases the inventory costs. KL have an opportunity of using the Just - In - Time method of inventory control which eliminates waste by making the resources and labor available only in the time and amount required. It will help increase productivity, product quality and work performance while saving inventory costs for the company. (Curtin, 2008). Kuiper Leda also needs to keep in mind that they will still have to fill orders from other clients that have previously placed orders or even new customers.
A, has recently made business decisions that appear to be attempts to protect the company by minimizing losses. Closing two stores in high crime areas, and declining to donate day old products to local food banks due to the possibility of fraud and concerns of employee theft may initially help Company Q’s bottom line, the passive attitude toward social responsibility will have a much greater negative impact on the company in the long run.
WISNER, J.D., TAN, K. and LEONG, G.K., 2009. Principles of supply chain management : a balanced approach / Joel D. Wisner, Keah-Choon Tan, G. Keong Leong. Mason, OH : South-Western Cengage Learning, 2009; 2nd ed. pp 111-113,262
A supply chain is a system through which organizations deliver their products and services to their customers. The network begins with the basic ingredients to start the chain of supply, which are the suppliers that supply raw materials, ingredients, and so on. From there, it will transfer the supplies to the manufacturer who builds, assembles, converts, or furnishes a product. The chain now needs to get the product to the consumer by transporting the finished product from the manufacturer through a warehouse or distribution center. An example is that Wal-Mart has a nearby distribution center where products are delivered there and then split up to be delivered to a retail Wal-Mart. “Wal-Mart will take responsibility for breaking down larger loads and delivering the product to other Wal-Mart stores” (Ehring 1).
The Home Depot home improvement store began to struggle after over two decades of successful business. Initially the company succeeded with all manual operations. As the business expanded manual inventory and ordering became ineffective and store shelves often were sold out of products (Laudon & Laudon, 2016). The lack of available inventory and employees busy with inventory management created a decline in the Home Depot business.
In manufacturing, inventories of raw materials allow companies to operate independently of their sources of supplies. Day to day operations are not dependent on deliveries from supplies since stock of the necessary materials are maintained and used s needed. Without inventory control, millions of naira could be lost year because of non accountability of stocks and inaccurate checks and balances. The process of control and management of inventory is a very important factor in the success or failure of any business. For example, little stock will result in stock out which will disrupt the production distribution cycle that is crucial to the survival of all manufacturing companies while too much stock will tie down the resources of a company. Poor or inadequate inventory management can present a serious challenge to the productive capacity of a manufacturing organization. In addition to raw materials and finished goods, many companies also maintain items of assets, property, inventories of work in progress, office supplies, business firms and general operation
Retail Inventory-Level Planning consists of retail inventory method (RIM) which is an accounting procedure whose objectives are to maintain a perpetual. It also can book inventory in retail dollars amounts and to maintain records that make it possible to determine the cost value of the inventory at any time without taking a physical inventory. Also known as book inventory system or perpetual book inventory. Retailers also have another important choice to make the stock to sales ratio. The stock to sales ratio is derived directly from the planned inventory to determine monthly additions to stock in the merchandise budget plan.
Launched by Jeff Bezos, the Amazon.com website started in 1995 and is today considered as one of the most prominent retail website on the internet with a record turnover of US$ 14.87 billion in 2007. Jeff Bezos’s intention was to create an internet based company with the most dedicated product portfolio on the internet where customers could find anything they might want. Amazon’s success is based on technology, services and products (Jens et al., 2003).
The first in, first out (FIFO) method of inventory valuation is a cost flow assumption that the first goods purchased are also the first goods sold. In most companies, this assumption closely matches the actual flow of goods, and so is considered the most theoretically correct inventory valuation method. The FIFO flow concept is a logical one for a business to follow, since selling
According to Obaidullah, economic order quantity consists of minimizing the total cost of inventory management through its order quantity of inventory. The two vital parts of economic order quantity is ordering cost and carrying cost. The ordering cost is based upon cost occurred by additional inventories. Carrying cost represents cost occurred by holding the inventory. Since they are totally opposite of each other the goal is to minimize carrying cost and increase ordering cost by ordering larger orders throughout the year and decreasing the amount of small orders. (Obaidullah, 2016) In the article, “ The Advantages & Disadvantages of Economic Order Quantity”, Harbour discusses key facts about using economic order quantity in business. Harbour states, It’s
In the scenario, the Supply Manager is responsible for making all decisions pertaining to the procurement of the product. Since operating costs are rising, the Supply Manager must be proactive in seeking solutions to reduce these costs and streamline certain processes. This must be accomplished by the end of the current quarter. Further, Corporate will see the savings or another increase in operating costs when the quarterly report is reviewed.
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
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.
Sustainable operation management is a management approach that involves planning, implementation and control of business operations that translate available resources into the required product or service. It is the management of business practices, traditions and operations to promote the highest level of efficiency, smooth workflow, and increased productivity in an organization. This management strategy ensures that the available labour force and materials are changed into products or services in a cost effective way to increase the company’s returns (Corbett, 2009). It also involves production waste management, food waste reduction, creating new opportunities, environment protection, and improving customer health. Sustainable operation management in the retail industry around the world has gained momentum in the recent years, in the face of customer pressure and media interest. It is particularly linked to the concepts of corporate social responsibility and global warming (Morrison, 2013).
According to the Council of Logistics Management, a professional organization of logistics managers, educators, and practitioners, formed in 1962 for the purposes of continuing education and development the interchange of ideas. Its definition is the process of planning, implementing, and controlling the efficient, cost-effective flow and storage of raw material, in process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.