Economic Order Quantity Model Of Inventory Management Case Study

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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

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