Inventory is an essential part of every business. Without inventory a business cannot produce and will most likely not succeed. Inventory control is therefore as vital because it is about managing and controlling the working asset which aids the business. In essence inventory control is about establishing values to inventory on hand, determining whether there are enough inventories to meet the demands of the business, ensuring that there is not too much inventory which could result in wastage as well as eliminating or lessening theft. How inventory is categorised is dependent on the business operation. Inventory levels within manufacturing enterprises will fall within three stock categories: raw materials, unfinished (also known as Work in Progress or WIP) and finished goods. A retail business for example a shoe shop will only have one kind of inventory and that is finished goods. Certain businesses will also adjust their inventory to reflect the seasonality of goods, once again the example of the shoe shop is used, in that the shoe shop might hold higher inventory of rain boots during winter than summer. The cost of holding inventories is also not to be underestimated. The costs to be considered are storage costs, labour, insurance as well as interest on unused inventory. With the aid of computer programs inventory management has certainly evolved over the years. There are several established inventory management models. (Pearsons 2010) The first one is ECQ or Economic Order Quantity which is concerned with how much inventory to order and is based on the premise that demand is constant and inventory should therefore be replenished at a constant demand. Within certain enterprises such as a hotel, this could also be termed par stock. The second method is termed MRP or Management Requirement System which accepts predetermined sales as an initial point. A software program then aids the timely delivery of the required goods which coincide with...
References: Advantages and Disadvantages of Just-in-Time (JIT) Manufacturing and Inventory Control System article available ONLINE at http://ritalogisticsblog.wordpress.com/2010/04/12/advantages-and-disadvantages-of-just-in-time-jit-manufacturing-and-inventory-control-system/ accessed 21 August 2011
Gunasekaran and Lyu 1997 – Implementation of just-in-time in a small company- A Case Study article available ONLINE at http://www.scribd.com/doc/36656046/jit-sme accessed 21 August 2011
OR Notes – JE Beasley 1984 article available ONLINE at http://people.brunel.ac.uk/~mastjjb/jeb/or/jit.html accessed 20 August 2011
The Toyota Production System available ONLINE at http://www.toyotageorgetown.com/tps.asp accessed 20 August 2011
University of Liverpool 2010 – Managing Resources – Third Edition - Pearsons
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