Topics: Business, Inventory control system, Supply chain management Pages: 3 (700 words) Published: February 28, 2013
Chapter 1
The Problem and Its Background

In a business accounting context, the word inventory is commonly used in American English to describe the goods and materials that a business holds for the ultimate purpose of resale. In the rest of the English speaking world stock is more commonly used, although the word inventory is recognized as a synonym. In British English, the word inventory is more commonly thought of as a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. It also involves systems and processes that identify inventory requirements, set targets, provide replenishment techniques, report actual and projected inventory status and handle all functions related to the tracking and management of material. Management of the inventories, with the primary objective of determining/controlling stock levels within the physical distribution system, functions to balance the need for product availability against the need for minimizing stock holding and handling costs. The inventory management system as applied to any Diaper’s Stores is primarily about specifying the shape and percentage of stocked goods; checking and recording the inventory each and...
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