The Three Main Factors In Inventory Control Decision Making Process

An analytical approach is also known as "structuring one's analysis." Here's what Morgan Jones, former CIA analyst, has to say in his widely acclaimed The Thinker's Toolkit, 1995. The book contains 14 powerful analytical techniques for solving difficult problems:

Exactly what does structuring one's analysis mean? The word analysis means separating a problem into its constituent elements. Doing so reduces complex issues to their simplest terms. (page xi)

If we are to solve problems, from those confined to a single individual to those affecting whole nations, we must learn how to identify and break out of restrictive mindsets and give full, serious consideration to alternative solutions. We must learn how to deal with the compulsions

Each element becomes a smaller and easier problem to solve.

nventory control is concerned with minimizing the total cost of inventory. In the U.K. the term often used is stock control. The three main factors in inventory control decision making process are:

The cost of holding the stock (e.g., based on the interest rate). The cost of placing an order (e.g., for row material stocks) or the set-up cost of production. The cost of shortage, i.e., what is lost if the stock is insufficient to meet all demand.

The third element is the most difficult to measure and is often handled by establishing a "service level" policy, e. g, certain percentage of demand will be met from stock without delay.

The ABC Classification The ABC classification system is to grouping items according to annual sales volume, in an attempt to identify the small number of items that will account for most of the sales volume and that are the most important ones to control for effective inventory management.

Reorder Point: The inventory level R in which an order is placed where R = D.L, D = demand rate (demand rate period (day, week, etc), and L = lead

This article will give the reader a general background into queuing theory its associated terminology and it relationship to customer satisfaction. Queuing theory has been used in the past to assess such things as staff schedules, working environment, productivity customer waiting time, and customer waiting environment. In pharmacy, queuing theory can be used to assess a multitude of factors such as prescription fill-time, patient waiting time, patient counseling-time, and staffing levels. The application of queuing theory may be of particular benefit in pharmacies with high-volume outpatient workloads and/or those that provide multiple points of service. By better understanding queuing theory service managers can make decisions that increase the satisfaction of all relevant groups - customers, employees, and