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Inventory Management And Its Effect On Customer Satisfaction

3727 words - 15 pages


Inventory Management

Inventory Management and Its Effects on Customer Satisfaction
Scott Grant Eckert1 Abstract This study examines inventory management and the role it plays in improving customer satisfaction. It looks at how food companies have been under pressure to streamline their inventory systems, and the consequences of such actions. It also examines how many retailers are trying to implement a “perfect order” system and how suppliers are constantly under pressure to meet the demands of these retailers. Many food companies are, therefore, looking at various inventory management systems as they belief this will have a positive effect on the satisfaction of their customers. The ...view middle of the document...

His inspiration comes from personal experiences as well as his national and international travels to places like the New Jersey shore, Ireland, Czech Republic, Hungary, Thailand, and China. Scott is a member of the American Marketing Association (AMA), the Academy of International Business (AIB), the Poetry Society of America (PSA), and the New Jersey Poetry Society (NJPS). His interests include writing, artwork, music, going to the beach or being near the water, meeting new people, going to new places, and doing/studying business. Journal of Business and Public Policy (ISSN: 1936-9794) Volume 1, Number 3 (Summer 2007)



Inventory Management

inventory. The holding cost is when the inventory comprises of raw materials, work in process, or finished goods. The inventory cost is in the range of 20 to 40 percent of annual inventory in dollars. Another variables associated with the holding cost is the opportunity cost, which comprises of any increase in rents due to the need for more space for inventory, higher rates for insuring the inventory, and the cost of goods that are outdated. Manufacturers and retailers can incorporate technology to assist in the managing of this inventory (Atkinson, 2005). According to retail historian, Robert Spector, a critical factor for retailers is that they have to have a good inventory system. If the retailer does not have a good inventory system, they will not be able to forecast demands with any kind of accuracy. This might result in them running out of stock every so often (Levinson, 2005). Customer satisfaction is the way the customer thinks about the company and deals with the meeting or exceeding of expectation over the lifetime of the products and/or services. A company’s loyalty and product repurchase comes from achieving customer satisfaction. The measurement of customer satisfaction is not an exact science because of its subjectivity. Because customer satisfaction is non-quantitative in nature, it requires sampling and statistical analysis. There is a gap between customer expectations and performance perceptions when measuring customer satisfaction. As a result of this, it is important to establish a linkage between customer satisfaction and bottom-line results. The term “satisfaction” refers to the quality of products and services, ongoing business relationships, price-performance ratios with respect to products and services, and meeting and exceeding the customer’s expectations. Satisfaction is identified by different industries in different ways depending on the customer’s relationships and the nature of the business. Manufacturers may look at the desire of on-time delivery and meeting the requirement of certain specifications. When measuring customer satisfaction, there should be critical variables involved.
Journal of Business and Public Policy (ISSN: 1936-9794) Volume 1, Number 3 (Summer 2007)



Inventory Management

Table 1: Variables



Customer’s needs

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