Independent and Dependent Demand
INTRODUCTION Inventory is the total amount of goods or materials contained in a store at any time. Store owners need to know the precise number of items on their shelves and storage areas in order to place orders or control losses. Factory managers need to know how many units of their products are available for customers orders. Restaurants need to order more food based on their current supplies and menu needs. All of these business rely on an inventory count to provide answers.
The word ‘Inventory’ can refer to both the total amount of goods and act of accounting them .Many companies take an inventory of their supplies on a regular basis in order to avoid running out of popular items. Others take an inventory to insure the number of items ordered matches the actual number of items counted physically. shortages or averages after an inventory can indicate a problem with theft (called “shrinkage” in retail circles) or inaccurate accounting practice(by Michael pillick,www.wisegeek.com , 22.4,2011)
REASONS FOR KEEPING INVENTORY * Reduce the risk of supplier failure or uncertainty-safety and buffer stocks are held to provide some protection against such contingencies as strikes, transport breakdowns due to floods or snow, crop failures, wars and similar factors * Protect against lead time uncertainties such as where suppliers’s replenishment and lead times are not known with certainty-in such cases an investment in safety stocks is necessary if customer service is to be maintained at acceptable levels * Meet unexpected demands or demands for customization of products as with agile production * Smooth seasonal or cyclical demand * Take advantage of lots or purchase quantities in excess of what is required for immediate consumption to take advantage of price and quantity discounts * Hedge against anticipated shortage and price increases, especially in times of high inflation or as a deliberate policy of speculation * Ensure rapid
The word ‘Inventory’ can refer to both the total amount of goods and act of accounting them .Many companies take an inventory of their supplies on a regular basis in order to avoid running out of popular items. Others take an inventory to insure the number of items ordered matches the actual number of items counted physically. shortages or averages after an inventory can indicate a problem with theft (called “shrinkage” in retail circles) or inaccurate accounting practice(by Michael pillick,www.wisegeek.com , 22.4,2011)
REASONS FOR KEEPING INVENTORY * Reduce the risk of supplier failure or uncertainty-safety and buffer stocks are held to provide some protection against such contingencies as strikes, transport breakdowns due to floods or snow, crop failures, wars and similar factors * Protect against lead time uncertainties such as where suppliers’s replenishment and lead times are not known with certainty-in such cases an investment in safety stocks is necessary if customer service is to be maintained at acceptable levels * Meet unexpected demands or demands for customization of products as with agile production * Smooth seasonal or cyclical demand * Take advantage of lots or purchase quantities in excess of what is required for immediate consumption to take advantage of price and quantity discounts * Hedge against anticipated shortage and price increases, especially in times of high inflation or as a deliberate policy of speculation * Ensure rapid