The Effectiveness of Inventory Management

During the game, I realized that wide gaps in orders of every role in the supply chain such as factory, distributor and retailer create inventory management challenges. For example, distributor records 0units between week1-week 4 compared to retailer within the same period. The retailer records 3units, 5units, 2units and 2units between weeks 1- week 4. The same applies to factory with 0units from weeks 2-4. Addressing inventory management problems requires developing an average unit level to avoid disappointing customers when demand

Planning and Forecasting is a vital function of management especially as it is related to inventory management. Planning has four processes associated with it. They are establishing goals, formulating strategies, implementing the plan and evaluating its success. The planning process of inventory will assist the organization choose the correct inventory system resulting in reduced costs and increased efficiency. For any business, having large amounts of inventory could prove to be expensive. In most company’s the management team will forecast sales on a monthly basis in order to keep enough inventories to fill customer orders in a timely fashion but not have an overflow of stock. There are various types of

Riordan Manufacturing has a large problem when it comes to inventory and customer orders. Because Riordan has offices both in the United States and in China, it faces a number of obstacles both in the logistics of inventory control and the need for accurate customer order management.

The current database provides a basic inventory system. For the new application to be a success, there are several items that need to be addressed with the current Kudler Database. For instance, Kudler needs additional tables such as Reserved Inventory table. This table will be a transaction table that will reserve the items by removing them from inventory and holding them in the reserved table until one of the following conditions is met.

The supply chain process can concentrate on inventory management process in the system to fulfill the order requested (Chase, Jacobs and Aquilano, 2006,). Riordan focuses on management of inventory from raw material to produce fans. It is necessary to track the quality and need of inventory for optimizing the performance of supply-chain process. These measurements are necessary for assessing the exact requirement of material based on revised production forecast sales with key inputs from the conceptual application of supply chain management (Chase, Jacobs and Aquilano, 2006).

Technological advances in machinery and management software can assist in forecasting demand, managing inventory, and speed up production. There are many tools that industry participant’s use:

I have taken it upon myself to test two inventory management systems and have found a system that will yield the least cost to Parts Emporium Inc. The two systems I have tested are the Continuous Inventory System and the Periodic Inventory System. Using data that I have gathered from the products DB032 and the EG151, I have compiled calculations and have concluded a continuous inventory system would be best for our corporation. Attached you will find said calculations; I would like to take this moment and present the continuous inventory system and recognize all of the relevant costs. The following is an explanation of each calculation under the continuous inventory system:

Consolidated Electric has already made forward strides in controlling inventory. However, much of the progress has proven ineffective as they implemented a system based on independent demand rather than dependent demand. Thus their system is based on assumptions that are formulated from a consistent level of business activity where reorder points and lead times can produce effective inventory management. However, CE finds that their level of business is anything but consistent. Irregularities in business within the construction industry are common. Thus

In some instances, procurement departments are challenged with purchasing decisions whereas vendors will offer better buying prices if they tend to order in larger quantities. Initially, the cost savings may seem beneficial up front, however, far too often the actually savings is not ever realized because the inventory becomes obsolete and written off as excess. On the contrary, ordering insufficient amount of inventory can result in stock-outs and loss of sales ultimately affecting customer

The data in the reports produced by the inventory system can be used to support

In the calculation of average inventory levels, a desired service level of 99% and a review period of 14 days with a lead time of 5 days were used to calculate the safety stocks and order-up-to-levels for each product under each circumstance. Then the amounts of overstock units were obtained by calculating the differences between OULs and average demands, and the overstock inventories were the overstock units multiplied by the unit cost. The annual average inventory levels were calculated to be $31,560.75 for the eight warehouses option, $14,120.28 for the two warehouses option and $9,403.24 for the one centralized warehouse option. As for the outsourcing option, the responsibility of inventory management would fall upon GL, so that there would be no inventories for SG.

Although Lynair’s current inventory management practices prove functionality over the last 20 years, there are five feasible options that will drastically improve parts accountability, and the amount of time spent on producing requisitions and purchase orders. The findings revealed a significant amount of time spent locating parts, and creating a requisition request for parts needed to complete an order even though there are many viable ways to improve operations. The five recommendations include; utilizing current software capabilities that are currently not being used; having noteworthy vendors implement their designed reordering systems; further review outside software systems to support inventory

A common way of decreasing the amount of inventory a business holds on a daily basis is implementing a just-in-time inventory process. A Just-In-Time inventory system means that the business gets the materials for a product, as they are demanded. “The electronic data

HP’s inventory crisis is caused by the high variability in demand and long lead times for which HP has no effective system in place. An effective demand forecasting system is needed, which not only takes into considerations qualitative factors (such as forecasted consumer behaviour, upcoming special events), but also quantitative factors (such as historical demand patterns, number of backlogs from last period). Along with the forecasting system, a Q inventory model should also be integrated. Using the calculated optimal order quantities and the ROPs from Exhibit 2, the European DC will know exactly when to place a new order. This will smooth out demand variability as the safety stock will ensure that there are minimal product shortages. This implementation will not be successful, however, until all of the departments accept and use the system. For this, HP needs to educate its employees about how the forecasting and Q-inventory system work and value it adds.

The completion of this study has inevitably involved various kinds of inputs from different people to whom Iam indebted.