...We discussed the flow of Inventory, and as you can imagine this is important to us being able to meet our customer expectations. Based on the materials covered, what method you feel is the best for managing flows of inventories. Inventory management is a criterion which is used to look after the flow of products and services in and out of an organization A company can operate with just one way of managing inventory or they can go for combination of inventory management methods depends upon the nature and amount of inventories. Businesses utilize inventory management strategies to create invoices and purchase orders, generate receipts and control inventory-related accounting. Just in time is a popular method of inventory control and management for a manufacturing concern. The concept behind this type of inventory control is that, the delivery of the inventory happens at the time of production and not earlier. It also delivers the exact amount of inventory that can be used for production, not more. JIT very much depend on the supply chain of a company because non availability of inventory will affect the process of production very badly. Some of the advantages of using just in time delivery are the following * Low warehousing costs. Since the inventory is not stored in Just in Time method, the expenditures on maintaining the inventory in the warehouse of the company can be eliminated. * Effective and efficient Supply Chain Management This method will make sure that...
Words: 452 - Pages: 2
...your text or other resources. Cite all resources consistent with APA guidelines. Term Definition Resource you used Time value of money Is the idea that money available at a present time is worth a lot more then the amount that its is in the future due to the “potential earning capacity”. The core principle of finance is provided money is able to earn interest and any money received sooner is worth more. Investopedia - Time Value of Money - TVM. (2014). Retrieved from http://www.investopedia.com/terms/t/timevalueofmoney.asp Efficient market Is a market that prices will quicky respond when there is an announcement of any kind of new information. Textbook. Primary versus secondary market Risk-return tradeoff Agency (principal and agent problems) Market information and security prices and information asymmetry Agile and lean principles Return on investment Cash flow and a source of value Project management Outsourcing and offshoring Inventory turnover Just-in-time inventory (JIT) Vender managed inventory (VMI) Forecasting and demand management University of Phoenix Material Definitions Define the following terms using your text or other resources. Cite all resources consistent with APA guidelines. Term Definition Resource you used Time value of money Is the idea that money available at a present time is worth a lot more then the amount that its is in the future due to the “potential earning capacity”. The core principle...
Words: 3500 - Pages: 14
...Inventory Management is a necessary Evil General Area: Supply Chain Management (SCM) Problem Area: Inventory Management a necessary Evil Ravi Kumar PGP/17/108 Email: ravik17@iimk.ac.in Indian Institute of Management, Kozhikode Abstract This article tries to explore how inventory management is one of the integral part of various business units in today’s business world. There are many modeling techniques available in Inventory management evolving very rapidly over a period of time, which can be used for performing different functions of meeting the customer satisfaction and helping the firms to achieve highly efficient SCM and in turn increase their profit margin. Not just that Inventory management systems have capability of meeting the uncertainty of demand by providing planned and effective way countering these uncertainties. This articles also discuss the critical point of inventory being a necessary evil i.e. with inventory firms have to bear certain cost but without it they can’t beat the demand uncertainties. The current models available however have discussed various issues related with the inventory management in real world but models are evolving to get rid of obsolescence and be competitive. There is lot of potential locked up in these models which can change the way managements make decisions in today’s world. Thus there is scope for applying systems thinking methodology this area and bring out synergies in different applications of Inventory management...
Words: 2800 - Pages: 12
...http://www.studymode.com/essays/Inventory-Management-622640.html INVENTORY MANAGEMENT 1. INTRODUCTION DEFINATION AND MEANING Inventory is a list of goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. The reasons for keeping stock All these stock reasons can apply to any owner or product stage. Buffer stock is held in individual workstations against the possibility that the upstream workstation may be a little delayed in providing the next item for processing. Whilst some processes carry very large buffer stocks, Toyota moved to one (or a few items) and has now moved to eliminate this stock type. Safety stock is held against process or machine failure in the hope/belief that the failure can be repaired before the stock runs out. This type of stock can be eliminated by programmes like Total Productive Maintenance Overproduction is held because the forecast and the actual sales did not match. Making to order and JIT eliminates this stock type. Lot delay stock is held because a part of the process is designed to work on a batch basis whilst only processing items individually. Therefore each item of the lot must wait...
Words: 6763 - Pages: 28
...and just celebrated its “Golden Anniversary”. The company has very strong customer orientation and very operations oriented. However, the working capital requirement to sales ratio is quite high at 0.115 last year compared to a industry average of 0.05. Thus, there may be some potential problem about working capital. According to the analysis of the newly hired CEO John Cummings, the company has abnormal high inventory level which is much over the required sales level. Therefore, inventory management could be the first step to look into the working capital problem of the company. Inventory Management Analysis Currently, the company adopts an ordering system of ordering five times a year, 750 crafts each order. The holding cost per unit is $333 and ordering cost per order is $320 (Table 1). Furthermore, taking the cost of capital, which is 15% for the company, the annual cost of current ordering system would be $28,457,437(Table 1), which is the net present value of the cash outflow for the 5 orders in the year as well as the holding costs and ordering costs. However, if the company adopts the just-in-time inventory management system, the company could order 110 every one and a half week, which means 35 orders per year and the last order would only order 10 crafts to match the required order amount per year. In addition, the ordering cost would be increased by $50 per order as the company has to do the forecasting for the inventory and sales based on a just-in-time...
Words: 856 - Pages: 4
...Businesses and Inventory Systems Inventory Systems Inventory systems are tracking systems designed for companies to maintain an accurate accountability of products in stock or on hand. Each time items are added or removed from inventory items on hand either decrease or increase in number. This paper will review inventory systems within Starbucks, Wal- Mart, Dell, Arby’s, and Starbucks. The paper will also provide information regarding the success of the inventory systems and if the companies are happy with the current systems. Businesses and Inventory Systems Dell is a leading global software company that manufactures desktop computers, notebook computers, network servers, work stations, and storage products. Dell uses the Just-In Time inventory system. Just-In-Time means a company can receive raw materials just in time to go into production and complete and assemble manufacturing parts just in time to ship to customers (Accounting 4 Management, 2012). The advantages of the Just-In-Time system are that it permits Dell to reduce overhead and have certainty that products are available. The Just –In-Time inventory system reduces the cost of doing business. For example, Dell does not have to spend an enormous amount of funds on the cost of warehouse storage and the customer receives the benefit of lower cost for products. The company has a high satisfaction rating because of their ability to produce products at a fast rate. The challenge includes the possibility...
Words: 1202 - Pages: 5
...Operations Management Group L51 Subject : Inventory Management Project Subject List Part I Pages 1) Introduction 3 2) The Meaning Of Inventory Management 3 3) The Importance Of Inventory Management 3 , 4 , 5 4) How Does Wal-Mart Manage Their Inventory 5 , 6 , 7 5) Conclusion 7 , 8 Part II Pages 1) Networked Inventory Management Information Systems ( Emerald ) 9 , 10 2) Zero Inventory And Firm Performance (Taylor & Francis) 10 , 11 3) Managing Inventories In The Machine Building Industry (science direct ) 11 Introduction: Part I In any business or organization, all functions are interlinked and connected to each other and are often overlapping. Some key aspects like supply chain management, logistics and inventory form the backbone of the business delivery function. Therefore these functions are extremely important to marketing managers as well as finance controllers. Every organization constantly strives to maintain optimum inventory to be able to meet its requirements and avoid over or under inventory that can impact the financial figures. Inventory is always dynamic. Inventory management requires constant and careful evaluation of external and internal factors and control through planning and review. Most of the organizations have a separate department or job function called inventory planners who...
Words: 2564 - Pages: 11
... Operations Management Literature Review and Critique Introduction Supply Chain Management is the combined set of practices, policies and frameworks that represent the relationship and the working dynamics between manufacturing, supplier, wholesaler, retailers and other supporting entities like warehouses, distributors etc. that enables final goods and services to reach the customers in the desired quantities and at the desired time (Heizer and Render, 2014). There are many parts or sub-components of the supply chain gamut that makes organzation operations effective and deliver goods and services in time. This literature review assesses and critiques quality management, inventory management and Just in time (JIT) and lean operations. All these topics are integral in attaining smooth SCM functions and activities in any organization. Various books, academic journals and perspectives of different authors have been referred to, in order to compile this paper. Quality Management and Supply Chain In layman language we understand quality as a highly desired feature, anything that is of high quality is in high demand, argues Fahey (2004) and more often than not, anything that is high in quality is high in price too, cites the author. Quality is thus one of the features that measure the goodness or desirability in a product and service that organizations produce or create. Casadesus and Castro (2005) cite that quality in tangible or manufacturing sectors implies a measure...
Words: 2344 - Pages: 10
...sister how well her clothing store was doing. She replied that everything was going well it’s just that she is frustrated with having to manually track and reorder high demand items. She then mentions that she would like to upgrade to an automated system that is on the low end of the expensive level. Being that I have technological skills and experience within the field, I agreed to help her purchase and installed a low budget automated inventory management system. I also took the time to explain to her how the system works. Inventory management is a database of hardware and software based tools that automate the process of tracking inventory. The kinds of inventory tracked with an inventory control system can include almost any type of quantifiable good, including food, clothing, books, equipment, and any other item that consumers, retailers, or wholesalers may purchase (inventory control system). This automated system is able to track merchandise, while altering when inventory is low, seasonal demands change, and communicating with suppliers in real-time. In addition the system can reduce the cost and time-consuming processes that were once completed by her manually, while providing her business with more accurate data. In addition, the system helps save time, keep a balanced inventory, and tracks inventory stock efficiently (Loackard). In order to establish an inventory management system there are necessary equipment that must be purchased. Due to the low availability of...
Words: 1058 - Pages: 5
...Inventory Proposal, Part 1 QRB 501 Inventory Proposal, Part 1 McDonald’s is an organization that offers fast food, which includes hamburgers, French fries, and other items, to the public. McDonald’s restaurant works to provide hot and fresh food to its customers. Maintaining freshness is sometimes difficult due to the inventory problem it faces. “What used to be the case was McDonald's would pre-cook a batch of hamburgers and let them sit under heat lamps. They would keep them for as long as possible and eventually discard what couldn't be sold” (Atkinson, 2005, p. 1). Minimizing waste is the goal of McDonald’s just in time inventory system. The benefit of making food when it is ordered is that the customer receives a fresh product and McDonald’s can eliminate waste and protect their inventory. “The only way to get a fresh hamburger under the old system was to make a special order. Now, due to more sophisticated burger-making technology (including a record-breaking bun toaster), McDonald's is able to make food fast enough to wait until it's been ordered” (Atkinson, 2005, p. 1). Inventory Management Problem Every business incurs operational costs and in restaurants inventory control is particularly important because the items held in inventory tend to be highly perishable. “It is not uncommon to have several hundred different types of raw food product in storage at any one moment and poor management leads to a significant waste” (Said, 2012). Each McDonald’s restaurant...
Words: 1697 - Pages: 7
...INVENTORY MANAGEMENT SYSTEM CONTENTS • ACKNOWLEDGEMENT • INTRODUCTION • PURPOSE • INVENTORY INVESTMENT CONTROL • FACTOR THAT AFFECT INVENTORY MANAGEMNT • INVENTORY REPLENISHMENT • REQUIREMENT SPECIFICATIONS • DATA FLOW DIAGRAM (DFD) • ENTITY RELATIONSHIP DIAGRAM (ERD) • REFERENCES ACKNOWLEDGEMENT I am thankful to miss Maneet kaur for providing me the task of preparing the term paper on INVENTORY MANAGEMENT SYSTEM. I am at lovely believe in taking challenges and the term paper provided me the opportunity to tackle a challenge in the subject of data base management system. This term paper tested my patience at every step of preparation but the courage provided by my teacher helped me to swing against the tide and move against the winds. I am also thankful to my friends and my laptop to providing me help at every step of preparation of the term paper. INTRODUCTION You are in trouble if you have to keep telling customers, "I'm sorry we're out of that size. May we order it for you?" Even though the shirts are selling briskly, you will lose customers if you don't have an item in stock. When the customer spends, you have got to be ready with the goods. This is what inventory management is all about. In many retail and wholesale operations, the single largest asset is inventory. Control of this investment is vital. It will eliminate a number of the problems associated with capital shortages and will also provide capital to permit expansion of operations for increased sales and profit...
Words: 1639 - Pages: 7
...B1. Adequacy of Funds Finances are one of the most crucial parts of any business. Every business has to be aware of what type of resources, especially financial resources, it has available to work with. The financial aspect of a business determines almost every other aspect of that business. Being able to utilize budgets, in order to reduce costs and make profit, is imperative. Pro forma accounting is a way of using the budget to analyze what to expect in the future. This statement should be used to forecast any issues that might lie ahead. It also should be used to provide time to the company to make any necessary changes, before it is too late. By using budget and pro forma accounting any company should have a good understanding of what type of financial resources are available to them in order to cut costs and increase profits. During the simulation I initially did not pay too much attention to the budget or the pro forma accounting statements, which did not do me any favors. After reviewing the pro forma statement at the end of the first quarter, I should have made adjustments. The cash flow was lower than the recommended $300,000, so I reviewed my decisions, but did not want to change anything. Which inevitably put my company in a high risk situation right from the start. When the quarter was done and I was able to review the actions that had taken place, I realized I was way over budget and the simulation automatically set me up with a loan shark to help...
Words: 3406 - Pages: 14
...Supply chain management is the management and coordination of a product’s supply chain for the purpose of increasing efficiency and profitability. The term supply chain management was coined by a consultant named Keith Oliver of the strategy consulting firm Booz Allen Hamilton in 1982. It combines processes of planning, implementing, and controlling the operations of the supply chain with the purpose of satisfying the customer requirements as efficiently as possible. It attempts to control or link the production, shipment and distribution of a product. This is done by keeping tighter control of internal inventories, internal production, distribution, sales and the inventories of the company’s product purchasers. It integrates supply and demand management within and across companies. The inventory contains the raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for selling. Inventory represents one of the most important assets that most businesses possess because the turnover of inventory represents a primary source of revenue generation and subsequent earnings for the companies’ shareholders/owners. However, possessing a high amount of inventory for long periods of time is not usually good because there are inventory storage, obsolescence and spoilage costs. On the other hand, possessing not enough inventory isn’t good either, because the business runs the risk of losing...
Words: 1268 - Pages: 6
...------------------------------------------------- Quality Focus Paper Just-in-Time Production and Lean Manufacturing Keller Graduate School of Management Spring Semester, May 2010 Session GM588: Managing Quality (online) Instructor: Robert Lee 5 June 2010 Table of Contents I. Introduction 3 What is it? 3 Background 5 History 7 II. Literature Review 9 Significance in Practice 9 JIT and Lean Thought Processes 10 JIT & Lean Thinking – General Principles 10 Advantages/Benefits of JIT/lean 10 Major Advantages/Benefits of JIT 11 Major Advantages/Benefits of Lean Productions 11 Relevance of JIT/lean in Today’s Businesses 11 Mistakes of Implementation 13 Additional Challenges 13 III. Demonstrations and Applications in the Business World 16 Survival Strategy for Business 16 List of Companies that use JIT/lean production techniques 18 Best Practices & Successful Implementation 18 IV. Conclusion and Reflection 20 References 22 Introduction * What is it? Just-in-Time (JIT) production is a set of principles applied to manufacturing and inventory to control the purchase of materials to produce units on a need-basis. JIT is set on the philosophy that controlling raw materials purchased for production to bring them into the manufacturing process as they are needed leads to cost savings and production efficiencies. JIT focuses on realizing that holding little or no inventory has economic and quality values for the organization. Manufactures receive...
Words: 4589 - Pages: 19
...TABLE OF CONTENTS 1.0 INTRODUCTION 2 1.1 The importance of Just In Time (JIT) 2 1.2 The Objectives of the study 3 1.3 The Research Methodology 3 2.0 LITERATURE REVIEW 5 2.1 The Definition of JIT 5 2.2 The Purposes of Just In Time 10 2.3 The Importance Elements In JIT Implementation 12 2.4 Difficulties and Issues Associated with Implementation of JIT Components. 23 2.5 Main Issues and Difficulties of Managerial Nature in JIT 30 2.6 The Benefits of JIT 34 2.7 The Limitation of JIT 36 2.8 The Relationship Model and Supporting Activities of JIT, TQM AND TPM 41 2.9 The Relationship between JIT Production and Manufacturing Strategy and their Impact on JIT Performance 43 3.0 FINDINGS 50 4.0 CONCLUSION AND RECOMMENDATION 59 REFERENCES 61 APPENDIXES 64 INTRODUCTION The Importance of Just In Time (JIT) Nowadays, companies used Just In Time (JIT) systems control work flow by bringing in materials and sending out goods on demand which is ideally, just enough to provide what consumers want. JIT also is a production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand. In just in time manufacturing system inventories are reduced to the minimum and in some cases they are zero. Companies typically hold inventory in three locations which are raw materials, work-in-process inventory of partially worked materials or sub-assemblies for workstations to complete...
Words: 14451 - Pages: 58
