Economical Order Quantity
Inventory Management System-Particular focus on Economic Order Quantity A case of Kaliti Food Share Company
Abstract
Correct management of inventory can be the difference between a business that hums along efficiently and one that sputters out prematurely. Management of inventory is important to any business that wants to succeed. Inventory systems are used in different companies today as a tool to make sure that the company strives into success. Inventory systems serve several functions for businesses; one purpose is raw material inventory system which is ensuring a sufficient amount of input is stocked for production. Currently the main problem faced in Kaliti Foods S.C is that the company is not in a position to know the adequate quantity of inventory to have in stock. Rather in the existing system it is believed that the more stock a company has is the best. It is true that having a large amount of inventory will help customers to make faster and immediate purchases; shipments will be done quicker, and will prevent the company of being out of stock of certain product and causing some opportunity cost with the customers. Therefore, in this research the group tried to examine the existing inventory management and cost evaluation methods applied and to recommend an inventory management systems that enable Kaliti Foods S.C has the best cost minimizing raw material order quantity, known as the Economic Order Quantity (EOQ).
1
Unity University-Quantitative Methods for Decision Making
Inventory Management System-Particular focus on Economic Order Quantity A case of Kaliti Food Share Company
CHAPTER ONE
1.1. Introduction
Inventory is generally defined as “stock at a particular location”. Traditionally inventory for a manufacturing business is classified as raw materials, work-inprogress, finished goods and MRO (Maintenance, Repairs and Operating supplies). Effective inventory management plays a critical role in the smooth and efficient running of any
Abstract
Correct management of inventory can be the difference between a business that hums along efficiently and one that sputters out prematurely. Management of inventory is important to any business that wants to succeed. Inventory systems are used in different companies today as a tool to make sure that the company strives into success. Inventory systems serve several functions for businesses; one purpose is raw material inventory system which is ensuring a sufficient amount of input is stocked for production. Currently the main problem faced in Kaliti Foods S.C is that the company is not in a position to know the adequate quantity of inventory to have in stock. Rather in the existing system it is believed that the more stock a company has is the best. It is true that having a large amount of inventory will help customers to make faster and immediate purchases; shipments will be done quicker, and will prevent the company of being out of stock of certain product and causing some opportunity cost with the customers. Therefore, in this research the group tried to examine the existing inventory management and cost evaluation methods applied and to recommend an inventory management systems that enable Kaliti Foods S.C has the best cost minimizing raw material order quantity, known as the Economic Order Quantity (EOQ).
1
Unity University-Quantitative Methods for Decision Making
Inventory Management System-Particular focus on Economic Order Quantity A case of Kaliti Food Share Company
CHAPTER ONE
1.1. Introduction
Inventory is generally defined as “stock at a particular location”. Traditionally inventory for a manufacturing business is classified as raw materials, work-inprogress, finished goods and MRO (Maintenance, Repairs and Operating supplies). Effective inventory management plays a critical role in the smooth and efficient running of any
References: 1. Steven M. Bragg, (2005), Inventory Accounting John., by John Wiley & Sons, Inc. Canada 2. Max Muller, (2003), Essentials of Inventory Management, American Management Association, 1601 Broadway, New York, NY 10019 3. Tony Wild, (2002), Best Practice in Inventory Management, Linacre House, Jordan Hill, Oxford 4. K.K Chawala, Vijay Gupta,Bhushan K. Sharma Page 857- 861 5. http://www. Isye. Umn.edu/courses/ie5551/additional materials/eoq.pdf 6. http://en.wikipedia.org/wiki/Inventory 7. http://www.productivity.in/knowledgebase/Material%20Management/Types%20 of%20inventories%20and%20effective%20control%20systems.pdf 8. Introduction to management science, Ninth edition by Bernard W. Taylor III 45 Unity University-Quantitative Methods for Decision Making