Hence, every part requires a relatively specialized management effort and control. ABC analysis is applicable in areas where parts of the inventory have clear differences and each part requires treatment very different from the rest of the structure (Gopalakrishnan & Sundaresan, 2003)
These effects have a significant impact in the succession of the company. Assigning someone the responsibility of monitoring the stock or alternatively increasing the number of times stocktaking happens to help avoid the effect on the company (Gudehus, 2012, p
For this case, there is no inclusion of that month in the calculation of a safety stock. The inclusion of such a month will cause misleading results on calculation of safety stock causing an increased amount of safety stock (Hill, 2012, p
The customers always affect the transfer of products in and out of the business hence their demand and taste influence the inventory management of the business. In order to solve this problem, the company should put forward promotional strategies such as offering free products to the customer that always attracts the customers into buying the product from the company (Huang, 2011, p
However, both methods require that an individual have an already resolute and the connected costs. In most cases, the easiest method is to place calculation values in spreadsheet software (Khanna, 2009, p
At some time, the prices the companies offer to the suppliers tend to discourage them. These shows the various fluctuations in this company's operation making the method of safety stock be ineffective (Li et al
Individuals that demand for these goods keep on changing their tastes and preferences that prompts these assumptions. This is also the main reason why companies need to compute EOQ annually (Lucey, 2003, p
This is because a higher inventory levels than usual will always make them pay more insurance costs. The MD feared the calculation of the buffer stock would have increased the spending of the company hence losses (Morlidge & Player, 2010, p
The only advantage of such a plan in inventory management is the consideration given to each brand item. Such a plan will award concentration into each item, and hence increase the chances of better accurate results (Plenert, 2007, p
The brands are, however, wide in terms of the variety. This runs up to more than 60 brands of product and has more than 15,000 SKU (Ross, 2009, p
Saxena (2009) attests to the significance of inventory system in collecting and processing large quantity of data. He believes that introduction of computer in the 1950s is responsible for reduction of cost of handling data which was quite high in the pre-computer days (Saxena, 2009, p
The first and considered the most important of the three is lead-time. Their suppliers come from different locations of the continent (Shah, 2009, p
Analysis of the forecasting method Business forecasting is significant for every business organization that would like to thrive in the competitive world. It helps the business in predicting the future trends in the market and consequently determines the proper ways of preparing towards the trends (Sridhar et al
The Goals of the Inventory Minimization of inventory investment while still meeting the functional requirements is the primary goal of inventory. According to John Toomey (2000), an improvement in dependability of the process as well as forecasting allow for reductions in inventory with positive maintenance of the most desirable levels of customer service and manufacturing efficiency (Toomey, 2000, p
The Goals of the Inventory Minimization of inventory investment while still meeting the functional requirements is the primary goal of inventory. According to John Toomey (2000), an improvement in dependability of the process as well as forecasting allow for reductions in inventory with positive maintenance of the most desirable levels of customer service and manufacturing efficiency (Toomey, 2000, p
In doing this, they are better positioned to tell where they stand at the end of the financial year. Using the safety stock, the company can determine where any inventory shortages may develop (Vona, 2011, p
The ordering process has other costs that the company will incur other costs in the process of ordering. In computing the EOQ, the people computing have to assume all the ordering costs are not only regular, but also known (Winston et al
In managing inventory, the company needs to have separate approaches to manage the inventory. One essential method of managing inventory is the ABC analysis (Wright and Race, 2008 p
This means that speed is the friend of technological retailers, while depreciation is the enemy. As Dell's CEO once said: "The longer you keep it the faster it deteriorates -- you can literally see the stuff rot" on the shelves (Atkinson, 2005, Dell)
This means that speed is the friend of technological retailers, while depreciation is the enemy. As Dell's CEO once said: "The longer you keep it the faster it deteriorates -- you can literally see the stuff rot" on the shelves (Atkinson, 2005, Dell)