Theoretical Framework

Topics: Inventory, Supply chain management, Output Pages: 2 (484 words) Published: September 24, 2011
Theoretical Framework

Figure 1.1 Theoretical Frameworks

The team proposed the Daily Sales and Inventory Management System is the volitional break of the operative material flow; and thus deliberately composed stocks develop. Inventory System needs a storage that means a room, building or area to store the item. The in-pouring items are called storage input, the outpouring items storage output. Therefore inventory system contains all activities and considers all consequences, which are connected with the storage of items. On the one hand there is the mere technical and logistical aspect of inventory control, for example the storage layout. On the other hand there are general questions, which are related to the total stock of accompany.

One of the most important decisions is about the quantity of inventories. Therefore a lot of mathematical models have been developed, which are summarized under the concept of Inventory Control within the scope of Operations Research.

For the stock of a retail market the outflow is induced through customer sales and the replenishment is secured through orders. The stock disposal therefore consists of ordering the right quantity (lot size) at the right time. Less order produces less order costs; but for a higher level of order quantity the storage costs rise. The advantage of a great inventory is that there is a high level of service and most customer requirements can be fulfilled. Real (short term) inventory problems are those, who deal with order costs, storage costs and the service level.

Problems of long term inventory control do not belong to this issue, because the order costs are considered global and not for each order. The situation is similar with intermediate storages. This storage is strongly bound to production and we cannot speak of a proper inventory problem. But the results of inventory control theory can be used for the disposal of intermediate storages.

The areas of application are all inventories...
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