Inventory Management must be designed to meet the dictates of market place and support the company’s Strategic Plan. The many changes in the market demand, new opportunities due to worldwide marketing, global sourcing of materials and new manufacturing technology means many companies need to change their Inventory Management approach and change the process for Inventory Control.
Inventory Management system provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities and communicate with customers . Inventory Management does not make decisions or manage operations, they provide the information to managers who make more accurate and timely decisions to manage their
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Inventory balance information in the distributor’s expensive computer system does not accurately reflect what is available for sale in the warehouse.
The return on investment is not satisfactory. The company’s profits, considering its substantial investment in inventory, is far less than what could be earned if the money were invested elsewhere.
CONTROLING OF INVENTORIES:-
Inventory control techniques are employed by the inventory control organization within the frame work of one of the basic inventory model, viz., fixed order quantity system or fixed order period system. Inventory control techniques represent the operational aspect of inventory management and help realize the objective of inventory management control.
Several techniques of inventory control are in use and it depends on the convenience of the firm to adopt any of the techniques. What should be stressed, however, is the need to cover all items of inventory and all stages, i.e., from the stage of receipt from suppliers to the stage of their use. The techniques most commonly used are the following:
Always better control (ABC) classification
Vital essential and desirable (VED) classification
Material requirement planning (MRP)
Just-in time
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In actual practical situations, there is an uncertainty with respect to the both demand as well as lead time. The total forecasted demand may be more or less than actual demand and the lead time may vary from estimated time. In order to minimize the effect of uncertainty due to demand and the lead time, a firm maintains safety stock, reserve stocks or buffer stocks.
The safety stock is defined as “the additional stock of material to be maintained in order to meet the unanticipated increase in demand arising out of uncontrollable factors”.
In simple it is tells about which is used to protect against uncertainties.
Because it is difficult to predict the exact amount of safety stock to be maintained, by using statistical methods and simulation, it is possible to determine the level of safety stock to be maintained.
DETERMINATION OF SAFETY STOCK
If the level of safety stock is maintained is high, it locks up the capital and there is a possibility of risk of obsolescence. On the other hand, if it is low, there is a risk of stock out because of which there may be stoppage of production. When the variation in lead time is predominant, the safety stock can be computed as:
Safety Stock = (Maximum Lead time- Normal Lead time) * Demand
SAFETY
We have to take their safety and family situation
No federal regulation of safety and no enforcement of state or
It also makes good business sense and it should be regarded as just important as the achievement of any other key business objective. [B HEAD] Health and Safety at Work Act 1974 Health and safety legislation
In the UK, policies for health, safety and security are not only give positive impact it also creates dilemma in relation to implement. Dilemma refers to a situation in which a difficult choice has to he made between two or more alternatives, especially equally undesirable ones. There are different types of dilemma in safety. This includes * Resource implications
Case File: Assignment One 1. What are the present dangers, safety threats or impending safety threats? Throughout the case file, we can see that the mother, Andrea S., has many types of personal and health issues: depression, schizophrenia, and bi-polar disorder.
Furthermore, in order to grow fiscally, it was best for corporations to avoid paying for or adhering to safety precautions. For example, the Triangle Shirtwaist Factory Fire of New York City in March 25, 1911, was a fire in which one hundred forty-six people died. The massive death count came from the lack of security precautions. For the company to keep a maximum amount of efficiency, workers wouldn’t be allowed breaks. To enforce this no-breaks rules, most doors in the building were locked, which trapped and killed most workers during the fire.
All businesses have an obligation to guarantee, so far as is sensibly practicable, the wellbeing, security and welfare of their representatives. They additionally have an obligation to shield non-representatives from dangers emerging out of their work exercises". Target makes sure that they give practicable and health and safety at work to their
Another external risk is a lost of a supply chain which is result in late or missed deliveries of inventory. A manufacturer of a product may discontinue making a popular item or cease business operations all together. Target can monitor external market conditions of its manufacturers however they cannot control their cash flows or business operations. Target should analyze and identify the potential consequences to potential risk situations (Popescu, Gherghinescu, & Ionete,
Capacity planning This is the process of knowing the production capacity an organization needs to meet the changing demands for the products. It helps to determine the quantity of the product needed by a firm to meet the demands of its customers. The capacity planning elements for Walmart are; facility, product and service, and human resource.
Fine Tuning the forecast The method used to forecast the expected sales lacks the input of external data like market condition (recession, boom etc), competitors, changing preferences, change in fashion, demographics etc. Only the internally available data has been used to estimate the demand for next period. The adjustments in the demand forecast can be made according to the following to reduce the chances of stock outs or over stocking: Market Condition:
The Value Chain 4 4. Operations Strategy Implications (Store level) 5 5. Inventory Management and Demand Forecasting 9 6. Supply Chain Management 9 7. Quality Management 11 8.
Q. 2. Recent development in Technology has enabled huge global organizations to avail information easily in their premises for smooth functioning of various departments within an organization. Much of a company's success comes down to its Supply Chain Management and logistics. The development of Information Systems in SCM helps in cost reductions, customer satisfaction and productivity.
In case, the demand fluctuates suddenly we adjust the supply by transporting our excess inventory or take some inventory from other distribution centres where sales are comparatively less. Tesla faces a rush order situation mostly in around festival time. To decrease the lead time, transportation costs and the excess inventory company have decided to invest in efficient and cost effective warehouses.
By using low-cost incremental technology that software applied to inventory control, order selection, short interval scheduling as well as sales forecasting. Company have managed to reduce their inventory levels through just-in-time system, electronic direct interchange (EDI) and extranet enabling retailer and supplier to be in constant touch. Electronic warehousing systems are used for the storage of information. (Marketing policy, planning and communication) For any changes which may occur, the company must be ready to adapt by having IT department that will handles all the technological issues.
TASK 1.1 Importance of operation management Operations management (OM) is the business function responsible for managing the process of creation of goods and services. It involves planning, organizing, coordinating, and controlling all the resources needed to produce a company’s goods and services. Because operations management is a management function, it involves managing people, equipment, technology, information, and all the other resources needed in the production of goods and services. Operations management is the central core function of every company. This is true regardless of the size of the company, the industry it is in, whether it is manufacturing or service, or is for-profit or not-for-profit.