Inventory Management And Inventory System

1865 Words8 Pages
2.1 Inventory systems A good inventory management represents the organisation with the right amount of product, at the right time, at the right place, and at the right cost. Inventory system is a guideline to monitor and control the inventory level, and determine the optimal amount of stock that the company needs to hold in order to satisfy customer demand. There are three aspects of manage inventory system, which are inventory planning, inventory management, and inventory control. Inventory planning is determining the optimum level to hold and the cost implications. Inventory management is to identify the correct inventory management process for different types of supply/demand patterns. And lastly, inventory control is integrity of the stock. There are four types of inventory, the first type is row material, and these are basic parts of final product but not processed. The second type is work-in-process, the basic parts undergone some change but not completed. The third type is maintenance/repair, it is necessary to keep machinery and processes productive. And the last type is finished goods, these are completed products awaiting for shipment. 2.11 Importance of inventory management Inventory represents as much as 50% of total invested capital, it is necessary for operational managers to balance between investments in inventory and service level that they provide. Therefore, it is important for the company to hold the right amount of inventory in order to reduce the
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