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
Hall, J. (2004). Merlin MRP Factory. [online]. Available: http://www.merlinsys.co.uk/index.html.
(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
Vonderembse, M.A. & White, G. P. (2013). Operations Management. San Diego, Ca: Bridgepoint Education, Inc.
Operations management is essential for the survival and success of any organization. According to Heizer & Render (2011), operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs. Operations managers today contend with competition, globalization, inflation, consumer demand, and consistent change in technology. Managers must focus on the efficiency and effectiveness of processes such as cost, dependability, distribution, flexibility, and speed. The intent of this paper is to discuss the processes and operations management of the Kroger Company.
...ory holding costs, ordering costs, and shortage costs, and have a classification system for inventory items.
Russell, R. S., & Taylor, B. W. (2011). Operations Management: Creating Value Along The Supply Chain. (7th ed.). Hoboken, NJ: John Wiley and Sons, Inc.
It is also critical to know the inventory that one has on hand during the period. If the corporation does not have an adequate amount of inventory whether they do it willingly or not, then the corporation will not be able to complete its products to its clients. This is a damaging reputation to the corporation itself. The integrated manufacturing aspect of the Sage 500 provides a solution to this problem, since it allows track the inventory and give specific data about its usage, such as the percentage of the inventory selected during a period of time.
Slack, N., Chambers, S., Johnston, R., Betts, A.,(2009). Operations and process management: Second edition. Harlow: Pearson Education Limited
Sethi, S, Yan, H, & Zhang, H. (2005) Inventory And Supply Chain Management With Forecast Updates New York, NY : Springer.
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.
One of the challenges for the operations manager in any business is the scheduling of key production activities. There are numerous variables that need to be considered in this planning process. These factors include production capacity, customer demand, supplier performance, design completion, cash flow, and staffing (Heizer, 2011). All these factors come together to create a production plan that can fluctuate based on many external forces. The idea of the master production schedule and the sales and operations plan is to help forecast and meet the required production levels. The goal is to maximize efficiency and profitability through anticipating demand and adjusting production schedules accordingly. The Sales and Operations Plan (S&OP) and the Master Production Schedule (MPS) are two tools used in operations management to assist in the scheduling process.
Inventory management is defined because a science mostly established art of guaranteeing that just enough inventory share is command with a company to fulfill demand (Coleman, 2000; Jay & Barry, 2006). it's mostly regarding specifying the size and keeping of stacked product. Inventory management is usually needed at completely distinct spots within a service or within multiple spots of a supply network to guard the standard and planned course of production up against the random disruption of running low upon materials or product. The scope of inventory administration also concerns the good lines between replenishment period interval, carrying costs of inventory, asset management, investment forecasting, inventory valuation, selection visibility,
The amount of action is some function of the discrepancy between goals and observed system status. Let us take an example of very frequently used illustration in materials production pertaining to inventory models. The status of inventory is linked with the production, distributors and retailers. A demand function has been specified in order to generate the orders from the ultimate customers. At each It is necessary to properly manage the material for efficiency of the system and controlling the costs.
Studying pre-existing models of operations management may be a smart approach to truly understand this field. But since technology is advancing by the minute, new concepts, and tools should be adapted for operations management. The book titled Operations Management strategically explains the different concepts, divisions, and approaches to operations management. References Encarta (2005) Definitions of Operations Management. Retrieved September 15, 2005.
Slack, N., Johnston, R. and Brandon-Jones, A. (2011).Essentials of operations management. 1st ed. Harlow, England: Financial Times Prentice Hall.
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...
University of Phoenix(Ed.).(2003) Operations management for competitive advantage[University of Phoenix custom edition e-text]. New York: McGraw-Hill. Retrieved February 01, 2005, from university of phoenix, Resource, MGT554- operations management website: https://mycampus.phoenix.edu/secure/resource/resource.asp