Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Explain the importance of inventory management
Explain the importance of inventory management
Inventory management conceptual framework
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Explain the importance of inventory management
BACKGROUND
Material management is one of the main components in the management of all types of companies. Material management plays an important role in supporting the company's performance, which relates to customer satisfaction, cost of production and financial performance. Ruauw (2011) stated that the raw materials required should be sufficient available so as to ensure smooth production. However, should the quantity of inventory it should not be too large so that capital tied up in inventory and costs. Meanwhile the inventory is not too big and not too small anyway because can slow down the production process. Failure materials inventory control default will cause a failure in obtaining profit. It is important for every company held inventory control to obtain the optimal inventory levels to maintain a balance between the cost of inventory too much to the cost of inventory too little.
PT Pembangkitan Jawa Bali (PJB) is one of state enterprise which manages some power plants in Indonesia. PJB has various types and characteristics of power plants which scattered throughout Java and Bali. PJB is responsible for managing power plants in the region of the island of Java and Bali with certain key performance indicators. In a power plant operational management, there are two Key Performance Indicator. Initially, the availability of power plants to produce electricity and the reliability of power plants.
The first key performance indicator stated as the availability power plant to produce electricity. This number of availability is called Equivalent Availability Factor (EAF). Then, the reliability of power plant formulated as Equivalent Force Outage Rate (EFOR). This number of EFOR reflected the long duration of unplanned shutdown of...
... middle of paper ...
.... Methods of Inventory Monitoring and Measurement. Logistics Information Management. Vol. 9, No. 3, pp. 11.
Ruauw, Eyverson., (2011). Pengendalian Persediaan Bahan Baku (Contoh Pengendalian pada usaha Grenda Bakery Lianli, Manado). Association of Science Education. Vol. 7, No. 1, pp. 1-11.
Jamshidi, H. and Jain, A. (2008). Multi Criteria ABC Inventory Classification: with Exponential Smoothing Weight. Journal Global Business Issues. Vol. 2, No. 1, pp. 61-67.
Teunter, Ruud H, Babai, M Zeid and Syntetos, Aris A. (2010). ABC Classification: Service Levels and Inventory Costs. Production and Operations Management. Vol. 19, No. 3, pp. 343-352.
Abuhilal, Laith, Gaith, Rabadi, Sousa-Poza, Andres (2006). Supply Chain Inventory Control: A Comparison Among JIT, MRP, and MRP With Information Sharing Using Simulation. Engineering Management Journal. Vol. 18, No. 2, pp. 51-57
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.
Once they develop and implement this inventory control system, inventory records are going to be upheld truthfully and that they will get the accurate standing of the inventory up-to-date. In order to maintain the steady continuous supply for production need... ... middle of paper ... ... ory holding costs, ordering costs, and shortage costs, and have a classification system for inventory items. In conclusion, while reading the case study, I saw much disorganization throughout the company’s entire system.
...n Empirical Comparison of Anticipatory and Response Based Supply chain Strategies.” The International Journal of Logistics Management. 9: 2; 21-33. Lair, Noor Ajian Mohd, Awaluddin Mohamed Shaharoun and Mohamed Shariff Nabi Baksh, “JIT Implementation across A Supply Chain and It effects on Inventory Distribution”, http://www.moste.gov.my/kstas/NSFWorkshop/NSF/nsf%5CAAI16.DOC Lenzini, Joshua M (2002) “The Army's answer to supply chain management Army Logistician”; Fort Lee; Sep/Oct 2002 Li, Yuan, Fan, Zhiping and Zhao, Xuan (1999). “An Integrated Framework of Supply chain Management System.” Software Engineering Conference 1999. Proceeding sixth Asia Pacific. 196 – 199 Pagh, Janus D and Martha C Cooper (1998) “Supply chain postponement and speculation strategies: How to choose the right strategy”, Journal of Business Logistics, Issue # 2, Volume 19, Pg. 13-33.
The information that is provided by the tags that identify the inventory may be so limited that it proves to be of no assistance. Sometimes the tag may be defective in that the machine that is programmed to derive information from it is unable to do so. This means that the inventory will not be delivered where it is supposed to be at the correct time messing up the entire supply chain system. Therefore, care must be taken when information is being fed into the tag.
Due to a reoccurring shortage of materials it has become more than obvious to the Mellankamps that a improved system is needed to handle inventory or they will continue to experience issues with sales. More specifically the inventory control,
After extensive last minute digging, I finally found a manager who trusted me enough to supply me with the name of the inventory system that is used. Unfortunately for me this is all I could uncover from my employer, but it is a start. Wal-Mart uses the SMART system. Because of the way it is spelled I can only assume that it is an acronym. I have been searching for over an hour on Google.com and finally produced some meager results, but here they are.
Types of Inventory Methods Essay # 2 There are two basic types of inventory methods, namely the Specific Identification method and the Cost Flow Assumption method. Companies choose their inventory method depending on various factors like the nature of their business, etc. The Specific identification method is used to determine the particular goods sold and which ones are still in inventory. Specific Identification is possible only in companies that sell a very limited variety of high cost items that can be and are easy to identify right from the time of purchase to the time of their sale.
The furniture company Somerset needs to retain its customer service record and remedy any of its global supply chain issues before it has an adverse effect on the brand and start losing customers. With a frequent change in the product catalog, keeping an excessive inventory will cut its profit and some of the product may become obsolete even before the furniture hits the retail outlet stores. In order to achieve profit and success, business employee many strategies and the supply chain strategy are one of the operational management techniques that use analytical decision making process to achieve the company goals and provide tools to effectively compete in the market (Taylor and Russell, 2014).
According to Srinidhi and Tayi (2004), companies that are flexible enough and are able to change from a JIT system to a traditional inventory system will have a competitive advantage over other firms who do not switch. In such uncontrollable environments, the major benefit of JIT becomes a handicap with the increase in delivery times and the added data handling and coordination required in such times. This leads to a decrease in quick response time, which ultimately leads to increase in costs to the firm.
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;
Zanjirani F., Rezapour, S. & Kardar, L. (2011) Logistics operations and management concepts and models, 1st ed. London ; Elsevier.
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
At times, certain materials are important by their absence, that is if they are not available, they hold up the production and there are high costs if shut-down or slow-down of production. By themselves these items may not be highly priced in the market. Though the investment in these items may be small, lack of any of these items bring the production process to a grinding halt. The cost associated with items due to their absence is known as ‘nuisance value’. VED classification is a kind of classification of items that deals with the critical nature of the items such as whether they are ‘vital’ (V) to the production process, or ‘essential’ (E) or just ‘desirable’ (D). Similar to the ABC analysis, VED analysis also has a major role in inventory management. VED ranking can be done based on the shortage cost of the materials that can either be quantified or qualitatively
There are two main phases that are important in the movement of materials: material management and physical distribution. Materials management is the timely movement of raw materials, parts, and supplies. The physical distribution is the movement of the firm’s finished products to the customers. Both phases involve every stage of the process including storage. The ultimate goal of logistics is to coordinate all efforts of the company to maintain a cost effective flow of goods.
ABC analysis is an inventory categorization method, which consists of dividing items into A, B and C. A being the most valuable item and C being the not much valuable item. The major goal for this method is let the managers give attention towards the critical few (a items) and not much on B items.