Production & Material Management

REAL TIME INVENTORY MODELS IN MANUFACTURING INDUSTRY

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1. INTRODUCTION:

INVENTORY MANAGEMENT:

Inventory is defined as a stock of goods that aremaintained by a business in anticipation

of some future demand. Inventory management is primarily about specifying the size and

placement of stocked goods. It has an impact on all business functions, particularly operations,

marketing, accounting, and finance. It is required at different locations within a facility or within

multiple locations of a supply network to protect the regular and planned course of production

against the random disturbance of running out of materials or goods. Inventory management

refers to all the activities involved in developing and managing the inventory levels ofraw

materials, semi-finished materials (work-in- progress) and finished goods so that adequate

supplies are available and the costs of over or under stocks are low. The cost of maintaining

inventory is included in the final price paid by the consumer. Good in inventory represents a cost

to their owner. The manufacturer has the expense of materials and labour. The wholesaler also

has funds tied up.

The major objective of inventory management and control is to inform managers how

much of a good to re-order, when to re-order the good, how frequently orders should be placed

and what the appropriate safety stock is, for minimizing stock outs. And also inventory

management should involve to balance the conflicting economics of not wanting to hold tool

much stock. Thereby having to tie up capital so as to guide against the incurring of costs such as

storage, spoilage, pilferage and obsolescence and, the desire to make items or goods available

when and where required (quality and quantity wise) so as to avert the cost of not meeting such

requirement. Inventory problems of too great or too small quantities on hand can cause business

failures. Thus, the overall goal of inventory is to have what is needed, and to...