Operations Management: Inventory Management and Capacity Management

2860 Words 12 Pages
Executive Summary:
The purpose of this assignment is to discuss two topics relating to Operations Management and tie it in to examples from companies. I have chosen to discuss both Inventory management and capacity management. The company examples have both come from the airline industry. I have discussed inventory management with regards British Airways Maintenance Area in Cardiff. They have recently implemented a fully online inventory system. By doing this they have increased their efficiency and have significantly reduced costs. They can now maintain over one hundred planes every year compared to seventy six previously. I have also discussed the limitations of inventory management while also discussing their limitations. I have
…show more content…
Inventory is important because if companies have inventory they are able to cope with random interruptions in either supply or demand. It is able to cope with operations which are unable to produce products simultaneously. It allows different stages of processing to operate at different speeds. It can cope with transportation delays in the supply network. There are also disadvantages to holding inventory however these disadvantages are necessary because it is important for companies to be able to hold onto some stock. These disadvantages are inventory ties up working capital as both a storage cost and etc. If inventory is not sold quickly there is more chance of damage and uselessness which is a waste of capital. Inventory takes up space and storage which again takes up working capital. Inventory managers have three day to day business decisions to make these are, How much to order, when to order and how to control the system. (Slack 2011).
Case Study:
The case study I am looking at with regards inventory management is the British Airways Maintenance Facility in Cardiff (BMAC) and their management of inventory for their maintenance, repair and operations (MRO) stock at their base. In order to stay on top of their inventory they have installed an inventory management system called the Cribmaster. The installation of this system has seen significant reductions in its cost and also the availability of stock. Cribmaster was…