This website uses cookies to ensure you have the best experience. Learn more

How Inventory Can Be Managed? Essay

6003 words - 25 pages

Inventory Management

Meaning, concept and definition of Inventory:
Inventory is stores of goods and stocks. In manufacturing, items in inventory are called stock keeping items, held at a stock [storage] point. Stock keeping items usually are raw materials, work-in progress, finished products and supplies. It is the stock of any item or resource used in an organization.
Inventory control is activities that maintain stock keeping items at desired levels. In manufacturing, since the focus is on a physical product, inventory control focuses on material control. In the service sector, since the focus is on a service [often consumed as generated], inventory control focuses less on materials ...view middle of the document...

5) To take advantage of economic purchase order size.
Why Inventories?
The fundamental reason for carrying inventories is that it is physically impossible and economically impractical for each stock item to arrive exactly where it is needed exactly when it is needed. Even if it were physically possible for a supplier to deliver raw materials every few hours, it could still be prohibitively expensive. The manufacturer must therefore keep extra supplies of raw material inventory to use when they are needed in the conversion process. Other reasons for carrying inventories are as follows:
• Return on investment and turnover Inventory should be viewed as an investment and should compete for funds with other investment opportunities. If you have studied finance, you have been introduced to the concept of the marginal efficiency of capital. This concept holds that a firm should invest in those opportunities where return is greater than capital costs to borrow. Both manufacturing and service firms are interested in return on investment, alternatively called return on assets, employed, return on assets is the ration of profits to assets. With a little thought we realize:
Profit/Assets=profit/sales x sales /assets
The ratio of profits to sales is markup and the ratio of sales to assets is turnover. Now we see that one way to improve return on investment is to increase turnover. We want to sell those assets that are in inventory over and over again in a reasonable time frame. One way to do this is to keep the assets in inventory low, thus improving the chance of high inventory turnover.
• Buffer stock When demand is unusually variable, some protection is needed against the prospects of high stock out costs. Inventory can be used to “buffer” against such uncertainties. Likewise, lead time, the time between ordering and receiving goods, is not always constant. Buffer stocks can be used to protect against stock outs from uncertain demand during lead time.
• Decoupling Inventories are also useful when they decouple operation-that is, when they break operations apart so that one operation’s supply is independent of another’s supply. This decoupling serves two purposes. First, decoupling operations means that breakdowns, material shortages, or other production fluctuations at one stage of operation do not cause later stages of operation to shut down. A second purpose of decoupling through inventories is that tone organizational unit can schedule its operations independently of other. In automobile manufacturing, for example, engine buildup can be scheduled separately from seat assembly, and each can be decoupled from final automobile assembly operations through in-process inventories.
• Production Smoothing Inventories can also help to level production. When we examined aggregate planning and scheduling, we noted that products can be built during slack demand periods and used in peak demand periods. Thus high costs of...

Other Papers Like How Inventory Can Be Managed?

How Can Things Be Changed for Common Man in India?

786 words - 4 pages How can things be changed for common man? The common man seems common but there power and there presence is not so common. The common man has limited needs and unlimited wants, he may be optimistic, he may be opportunistic and he may be self centered but a common man will remain common and unstable if he is powerless. Things don’t work out easily for common people. Life seems so unfair and demanding to us as we all go through the same phase

Explain How Natural Law Theory Can Be Used to Decide the Right Moral Action

610 words - 3 pages Explain how Natural Law theory can be used to decide the right moral action [25] Natural law is an absolutist theory which is most commonly associated with Thomas Aquinas. It mainly relies on Aquinas’ theory that humans try to do good things and try to avoid evil in order to find fulfilment and happiness in life. However, according to Aquinas there are two types of good. There is the real good and the apparent good. The ‘real good’ is something

What Kind Of Threats Are There From Using Information Technology And How Can They Be Prevented?

1632 words - 7 pages have this advantage. The computer time and data can be changed to match the last edited date and the new information can be entered provided an adequate password is used to access the information to begin with. Once again, we see the example of how access must be prevented to secure the information. In the above example, I spoke of a data record being changed. This is called a breach of data integrity or a false change in the true data. Another

How Can The High Teen Pregnancy And Sexual Transmitted Disease Rate Among Mississippi Teens Be Solved?

695 words - 3 pages E’Lexus Moore EN 111 003 Mr. Brian Kehler June 22, 2012 How can the high teen pregnancy and sexual transmitted disease rate among Mississippi teens be solved? The United States teen pregnancy rate has fallen, but Mississippi still has the highest birthrate in the nation. Mississippi reported 64 births per 1000 teens aged fifteen through nineteen in 2011, more than 60 percent above the United States average. To solve the high rate of teen

How Far Can Business Methods Developed In One Country Be Applied In Another

1826 words - 8 pages described by Hofstede as symptomatic of the issue at hand. Hofstede states that "not only organisations are culture bound; theories about organisations are equally culture bound." Morden (1993) comments "There is no guarantee, therefore, that theories and concepts developed within the cultural context of one country can with good effect be applied in another. This implies that it is not possible for such theories to be 'universally

~ Which Diseases Are Most Prevalent in Your Country & How Can They Be Combated?

1625 words - 7 pages ~ Which diseases are most prevalent in your country & how can they be combated? 1. Diabetes ; Diabetes occurs when the body can’t make enough insulin or can’t properly use the insulin it makes. We have 2 forms of Diabetes: One form of diabetes occurs when the immune system attacks and permanently disables the insulin-making cells in the pancreas. This is type 1 diabetes, once called juvenile-onset, or insulin-dependent, diabetes. The other

How Far Can the Relationship Between Beatrice and Benedick Be Seen as Superficial in Much Ado About Nothing

585 words - 3 pages How far can the relationship between Benedick and Beatrice in acts 1 and 2 in ‘Much Ado About Nothing’ be seen as comedic? Comedy is firstly created in Act 1 when witty banter is exchanged between Beatrice and Benedick, this is first shown when Beatrice refers to Benedick as ‘Signor Mountanto.’ The use of the appellation ‘Mountanto’ implies that Beatrice sees Benedick as a farce, being over the top and flashy. At this point in the play the

Explain in Detail How Teaching and Learning Plans Can Be Adapted to Meet the Individual Needs of Learners

663 words - 3 pages Teaching and learning plans are a detailed account of what learning students will be undertaken. they allow for differentiation between different learners and gives opportunities to try different teaching methods evaluating the outcome for next time. Allotting timings to each task allows the tutor to complete the required action within the session but dependent of the learners can lead to activities being achieved in the next session. Every

Discusses How Employees Affect Consumer Behavior And What Can Be The Best Ways To Improve Their Effectiveness. Personal Experience

727 words - 3 pages SummaryI am going to discuss how employees affect consumer behavior and what I believe are the best ways to improve their effectiveness. I will be drawing upon my experiences as a consumer and working in a retail environment.CommentsNo one fulfills your corporate philosophy or promotes your products and services more than your employees. They are like ambassadors representing the United States when the president can not be there in person. You

Explain Why Many Cold Environments Are Fragile And How They Can Be Cared For The Ensure Sustainability (15 Marks)

537 words - 3 pages Explain why many cold environments are fragile and how they can be cared for the ensure sustainability (15 marks) A fragile environment is an environment that is very susceptible to change at the slightest alteration in conditions. The changes can often lead to the environments endangerment or destruction. Cold environments are very fragile because they are so susceptible to changes. Slight fluctuations in average sea or air temperature can

How Far Can the Rebellions of 1549 Be Considered a Key Turning Point in the Changing Nature of Rebellion Against Tudor Rule in England 1485 to 1587?

2064 words - 9 pages How far can the rebellions of 1549 be considered a key turning point in the changing nature of rebellion against Tudor rule in England 1485 to 1587? The period between 1485 and 1587 sprouted a large amount of rebellions during the reign of the Tudors. The 1549 rebellions can be seen as significant in the changing nature of rebellion based on numerous factors. Yet were there any other rebellions which contributed more to the changing nature

Related Essays

How Products Can Be Advertised More Effectively

913 words - 4 pages How products could be advertised more effectively I think that the caffeinated energy drink called “Monster” is not being marketed effectively. It is an energy drink that helps fight fatigue, improves mental performance and helps to focus better, and motivates you to work harder. At least this is what is on the can on the label on the back. This energy promises a kick from caffeine and other ingredients such as taurine and ginseng. I

How Can Crtiical Thinking Be Developed

1089 words - 5 pages ------------------------------------------------- How can Critical thinking be developed Abdullah Mohammed October 21, 2015 Critical thinking Introduction Though most teachers aspire to make critical thinking a primary objective of their instruction, most also do not realize that, to develop as thinkers, students must pass through stages of development in critical thinking. That is, most teachers are unaware of the levels of intellectual

Can Leaders Be Flexible In How They Interact With Others?

651 words - 3 pages objectives keep changing in response to situations. This can essentially alienate people The situational leader can be flexible in how he or she chooses to interact, but only if he or she is working with experienced employees. They can change their behavior because they know that the employees are going to react to the changes. As far as personality goes, however, it is never wise for a leader to change their personality suddenly because the

How Can One’s Life Be Affected By Society

579 words - 3 pages Joseph M. Cotoia ENG-105 English Composition December 5,2010 Grand Canyon University How can one’s life be affected by Society Most of us were raised going to church, taught that following the way of God was the right way and sinning was a problem. I am a Catholic/Christian and for me it is hard to follow in the footsteps of my Savior. There is so much temptation in this life how can one not be swayed away