ROLE OF JUST IN TIME IN INVENTORY CONTROL SYSTEM
Synopsis submitted to the
Padmashree Dr. D Y Patil University
In partial fulfillment of the requirement for the award of the
MASTERS IN BUSINESS ADMINISTRATION
KSHITIJ V. THORAT
(LSCM,Roll no. 011150)
PROF. ASHUTOSH MAITREYA
Department of Business Management
Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. The most important objective or inventory control is to determine and maintain an optimum level of investment in the inventory. Most companies have now successfully installed one or the other system of inventory planning and control. Inventory Management and Inventory Control must be designed to meet the dictates of the marketplace and support the company's strategic plan. The many changes in 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. The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities, and communicate with customers. Inventory Management and the activities of Inventory Control do not make decisions or manage operations; they provide the information to Managers who make more accurate and timely decisions to manage their operations. The basic building blocks for the Inventory Management system and Inventory Control activities are: Sales Forecasting or Demand Management Sales and Operations Planning Production Planning Inventory Reduction.
Inventory Control is the most important function of the Materials Management and it forms the nerve center in any Materials Management Organisation. Inventory Control is the process of deciding what and how much of various items are to be kept in stock. It also determines the time and quality of various items to be procured. The basic objective of Inventory Control is to reduce investment in inventories and ensuring that production does not suffer at the same time. Effective inventory management requires an effective control system for the inventories. In managing inventories, the firm’s objective should be in consonance with the shareholders, wealth maximization principle. To achieve this, the firm should determine the optimum level inventory. Efficiently controlled inventories make the firm flexible. Inefficient control results in unbalanced inventory and inflexibility – the firm may sometimes run out of the stock and sometimes may pile up unnecessary stocks. This increases the level of investment and makes the firm unprofitable. To manage inventories efficiency, answers should be sought to the following two questions: 1. How much should be ordered?
2. When it should be ordered?
The first questions, how much to order relates to the problem of determining economic order quantity (EOQ), and is answered with an analysis of costs of maintaining certain level of inventories.The second question, when to order arises because of uncertainty and is problem of determining the reorder point. JUST IN TIME
Just-in-time (JIT) is a management philosophy that strives to eliminate sources of manufacturing waste by producing the right part in the right place at the right time. Waste results from any activity...