Inventory Management: Case Study

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Inventory management is one of the important functions of production management. Inventory levels must be maintained in order to balance the carrying costs and the cost of providing reasonable levels of customer service. Inventory management includes the tracking of inventory transactions, accurate information about demand and lead times, realistic cost estimates and a system for classifying the items in the inventory to ensure various levels of control. Some of the classification techniques discussed in this chapter are ABC classification, VED classification and FSN classification. Two classes of inventory models are demonstrated: EOQ model and EBQ model. Both the models answer the question of how much to order. EOQ is calculated…show more content…
Compare and contrast the various classification techniques in inventory management. Briefly explain the cost trade – offs that occur in inventory management. “A decrease in the set up time can lead to a decrease in the average amount of inventory a firm carries” – How? A fertiliser manufacturing company produces type A fertiliser in 10kg bags. The demand for the product is estimated as 20000 kg per day. The capacity for producing the product is 50000 Kgs per day. Set up cost is ₹ 200 and storage and handling costs are ₹ 2 per Kg per year. The firm operates 280 days in a year. How many bags per run are optimal? What would be the average inventory be for the lot size? Determine the approximate length of production…show more content…
Accountingnotes.net. Retrieved from http://www.accountingnotes.net/cost-accounting/inventory-cost-accounting/various-inventory-control-techniques/10252 Inventory Control Techniques for Materials Management of Dental Stores in Clinical Dental Set-up’s: A Review Materials Management of Dental Stores in Clinical Dental Settings (2015). onlinereview.segi.edu. Retrieved from http://onlinereview.segi.edu.my/pdf/vol8-no2-art4.pdf Analysis of Inventory Control Techniques; a Comparative Study (2013). Ijsrp.org. Retrieved from http://www.ijsrp.org/research-paper-0313/ijsrp-p15107.pdf
External Resources Adam, Jr, Everette, E., Ebert, Ronald J. (1992). Production and Operations Management (5th Ed.). Delhi: PHI Learning Private Limited. Chary, S, N., (2012). Production and Operations Management (5th ed.)New Delhi: McGraw Hill Education (India) Private Limited. Stevenson, William, J. (2017). Operations Management (12th ed.) Chennai: McGraw Hill Education (India) Private Limited. Gaither, Norman., Frazier, Greg. (2007). Operations Management (9th ed.) Delhi: Thomson Learning Inc. Jain, K, C., Verma, P, L., & Kartikey, Prabhat. (2013). Production and Operations Management (1st Ed.). New Delhi: Dreamtech
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