INVENTORY CONTROL

Inventory control

Inventory control

Introduction

In any business, inventory management play a vital role in business operations. It is the fact that in any business, without any effective inventory management it is difficult for business to determine that the business is having enough inventories which are required for fulfilment of customer needs. In worse scenario of business does not have sufficient inventory in hand for production of the products that business requires to meet the needs of the customers. Therefore, there is significant importance of inventory management in business, and without effective control over management it result in difficulty for business in meeting needs of customer effectively.

This paper aims at answering the questions that are related to the case study of business Water for Africa (WFA).

Discussion

It is mentioned above that the concept of inventory management is emerging and gaining its importance. It importance is more found in reducing the inventory for business operation. It is also found that inventory issues are more closely related to the business involve in customer service. The expectations of customers are that the required item should be readily available when it is needed by them (Michalski, 2009, pp. 213-222). In addition to this, if the internal customer is faced with empty shelf, the advantage of the production process stops, the external customer of the business cannot complete its procurement, and there is a chance for business that the customer could likely to go for competitors of the business.

Inventory management

In any business inventory holding strategy plays an important role for business operational success.

There are three major strategies for holding the inventory and these are discussed below:

Just in time inventory management - it is the strategy for inventory in which order for inventory is placed in a condition when it is required by the business; otherwise it is not kept in stock. In this strategy, small quantities are ordered for the inventory. Business saves the cost of business by saving its expenses on cost of holding the inventory. It requires careful monitoring of the inventory to effectively maintain the requirement of inventory.

Economic order quantity - it is the strategy for inventory in which it is supposed that the demand for the inventory will be at a constant level or might be at approximately constant level. The aim of this strategy is to minimize the cost of ordering and holding of inventory. In this strategy, it is supposed that the lead time taken by the inventory is persistent. Also, there is no space for shortage of inventory (Buzacott & Zhang, 2004, pp. 1274-1292). The main characteristic of economic order quantity is to opt for order quantity that results in lowering management cost of inventory and time, which helps business in over aging and shortages in inventory.

Material resource planning - it is the inventory strategy that is employed in computer inventory systems that keep significant level of inventory which makes sure that there is required inventory available when it is needed by the ...